Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

NEW WRIT

For Monmouth, in the room of Sir John Stradling Thomas, Kt.—[Mr. Ryder.]

HOOK ISLAND (POOLE BAY) BILL

Read a Second time, and referred to the Examiners of Petitions for Private Bills.

LONDON UNDERGROUND (SAFETY MEASURES) BILL [Lords]

Order for Second Reading read.

To be read a Second time on Thursday 25 April 1991.

Oral Answers to Questions — EDUCATION AND SCIENCE

Scientific Research

Mr. Kirkwood: To ask the Secretary of State for Education and Science if he will set up an inquiry into the state of scientific research in the United Kingdom; and if he will make a statement.

The Parliamentary Under-Secretary of State for Education and Science (Mr. Alan Howarth): No Sir. Britain has a science base of remarkable quality and the Government will continue to provide appropriate support for it.

Mr. Kirkwood: Is it not now time for a full-scale inquiry into the levels of funding available to scientific research and the rates of pay available to university teachers? Does the Minister share the concern that has been shown by others about the conclusions of the House of Lords Select Committee on Science and Technology, which, for example, showed that this year the science and engineering research council has enjoyed—if that is the right word—a 3 per cent. increase over its budget of last year? Does he also agree that it is time that the Government came forward with reasonable and adequate resources to enable university employers to pay a more reasonable level in wage settlements than the 6 per cent. currently on offer?

Mr. Howarth: The Government have advisory bodies—the Advisory Board for the Research Councils and the Advisory Committee on Science and Technology—that are well placed to advise us on scientific research and I see no need for a special inquiry. We are considering the report of the House of Lords Select Committee, and the Royal Society is conducting its own inquiry, so we need no further inquiry. As for resources, the Government have

increased the science budget by 22 per cent. since they have been in office. That matches the expansion of gross domestic product. We shall continue to support British science, but the extent of that support depends on the progress of the economy.

Mr. Rhodes James: Is my hon. Friend aware that concern about that matter is not confined to one side of the House? The wise warnings of Sir Claus Moser last August should be taken seriously.

Mr. Howarth: As my hon. Friend represents Cambridge, he is particularly knowledgeable on, committed to, and concerned about those matters, but he will also be immensely proud of the outstandingly distinguished science work that takes place in Cambridge. I was disappointed because, after Sir Claus Moser made his speech at the annual meeting of the British Association for the Advancement of Science, I suggested that it might be helpful if we met to talk on the subject. However, he declined to take up my invitation.

Dr. Bray: Is the Minister aware that we need action, not another inquiry? We need wide-ranging action not only on resources, which have fallen far behind those of our industrial competitors, but on science education. There are many priority areas within science to which resources need to be switched, such as the realignment of defence research. It is clear that the Government are failing the nation.

Mr. Howarth: The hon. Gentleman has overlooked the introduction of the national curriculum and the redefinition and improvement of science education for all our children. He has also overlooked the remarkable increase in the number of students undertaking science and engineering courses. As for action, the hon. Gentleman may have been a little disappointed by the Labour party's policy document that was issued last week. I found it remarkably vague and imprecise. His party seems to have adopted a policy of favouring particular sectors of science. It seems both foolish and wrong in principle to politicise decisions about scientific priorities. That document proposes the borrowing of unspecified sums to support the hon. Gentleman's purposes. It proposes to reduce defence spending, again on an unspecified scale. It is an extremely unimpressive prospectus.

Standardised Testing

Mr. Amos: To ask the Secretary of State for Education and Science if he will make a statement on the introduction of standardised testing in schools.

The Minister of State, Department of Education and Science (Mr. Tim Eggar): Seven-year-olds will be tested nationally in English, mathematics and science for the first time this summer. Tests in other subjects and for other age groups will be phased in over the coming years.

Mr. Amos: As many parents do not take seriously their responsibility in bringing up their young children, does my hon. Friend agree that standardised testing at the age of seven years will give schools the opportunity to monitor and identify pupils' achievements in relation to their ability? Does he accept that that will be of enormous value in channelling more assistance to those who are in need,


and that the tests are nothing to do with pass or fail? Instead, they relate to identifying needs and channelling help to where it is needed.

Mr. Eggar: I much agree with my hon. Friend. It is extremely important that the results of the assessments and tests should be passed on to parents in a readily understandable way through annual reports. We shall be publishing a leaflet to accompany the reports, which we hope will help parents understand the results of the reporting mechanism.

Mr. Rees: If one of the tests shows a particularly low grade for a seven-year-old child, who will be responsible, within the school, for testing further to ascertain whether there are special disabilities such as dyslexia? If there is such a problem, what power does the Secretary of State have to tell local authorities to provide remedial classes—it would be no use for parents to take that course—in such cases? I am extremely dissatisfied for personal reasons, but I am not making a political point. I think that we have forgotten that something may be wrong, and that not enough has been done for those who suffer from dyslexia.

Mr. Eggar: I understand and share the right hon. Gentleman's concern about dyslexia. In 1981, I initiated the first Adjournment debate on dyslexia. The results of national curriculum testing, especially in English, will enable teachers to identify children who are working towards level 1—in other words, those who have not attained that level. I would expect teachers and head teachers to get together to try to identify why a particular child had not achieved level 1 and then to formulate a system of help and assistance for that child. Outside help from the school, such as that from a child psychology support, may be needed.

Mr. Straw: Statementing?

Mr. Eggar: As the hon. Member for Blackburn (Mr. Straw) says, it might be appropriate to go towards statementing. Each individual child will have to be dealt with, however, as an individual, depending on the result of the tests.

Mrs. Ann Winterton: Does my hon. Friend accept that the majority of parents in my constituency are much in favour of tests at the age of seven years? Will he accept also that we all believe that bureaucracy should be kept to a minimum so that teachers can spend the maximum time with children rather than going through procedures that at present are rather tortuous?

Mr. Eggar: I agree that we must continue to work towards reducing bureaucracy. I intend, as a result of the national pilot of tests of seven-year-olds, to ascertain whether we can simplify the procedures.

Mr. Straw: Is the Minister aware that, while teachers are showing a high level of professional dedication and commitment in administering the tests, there is great anxiety among teachers and, I think, parents about the amount of curriculum time that has to be devoted to the tests? For example, at a school that I visited yesterday in Peterborough, every half day between now and half term is being devoted to the administration of the tests and that is disrupting the teaching of children. As the Minister referred to this year's tests as a national pilot, may we take

it that Ministers will examine carefully the experience of the standard assessment tasks to ascertain whether they can be slimmed down further so that they serve a purpose without over-burdening teachers or disrupting teaching?

Mr. Eggar: I have no hesitation in agreeing with the hon. Gentleman. We must examine carefully the results of the national tests to determine whether the right balance has been struck between manageability on the one hand and fairness to the child on the other. We shall examine that. If the hon. Gentleman wishes to give us his views, I shall be delighted to take them into account.

Truancy

Mr. Holt: To ask the Secretary of State for Education and Science what information he has on the current level of truancy and on the figure for each of the past 10 years; and if he will make a statement.

The Parliamentary Under-Secretary of State for Education and Science (Mr. Michael Fallon): The proposals that we published last week will enable truancy levels to be measured, for the first time, on a standard national basis. They require schools to record attendance in a way which identifies unauthorised absence, and to publish their rates of unauthorised absence.

Mr. Holt: I thank my hon. Friend for that statement, which is overdue. Will he look again at the inflexibility of the school-leaving age and perhaps link truancy with training? Is he aware that in France, Germany and Italy, youngsters are allowed to leave school and embark on a proper training course or apprenticeship, so long as it is an integral part of education? Is he aware that that would reduce truancy because young hands and minds could get involved with something they know and understand? At the moment, some youngsters who are forced to stay on at school until 16-plus as a minimum, often become the truants who cause the vandalism and troubles in our society.

Mr. Fallon: I am grateful to my hon. Friend for his remarks about our proposals. We want to see a better and earlier vocational training in schools, which is why my right hon. and learned Friend decided in January to allow schools more flexibility over the curriculum from the age of 14 onwards.

Miss Lestor: I thank the Minister for sending me a copy of his proposals, which I received yesterday. Is he aware that punitive methods and measures in relation to young truants will not necessarily be effective unless more work is done in looking at how youngsters who are truanting spend their time? I think that he will find, if he talks to his colleagues in the Department of Employment and studies the report on the illegal working of children, that large numbers of young truants are working illegally.

Mr. Fallon: I know of the hon. Lady's long-standing interest in the matter. If she has any evidence that children are being employed illegally, she should forward it to my Department or to the Department of Employment. I accept that it is not simply a question of punitive measures. We have, under the Children Act 1989, new instruments, such as education supervision orders, which come into


force later this year, and which I hope local education authorities will consider alongside the increased fines that are proposed in the Criminal Justice Bill.

Mrs. Gorman: Having taught in secondary schools for 10 years before coming to this place, I am aware that truancy is often linked to tedium. Will my hon. Friend accept that the curriculum is still far too academic as it concentrates on the passing of O-levels and does not contain sufficient in the way of practical subjects to interest children? I agree with my hon. Friend the Member for Langbaurgh (Mr. Holt) that we should consider allowing children to leave school a little younger so that they can obtain the experience of practical work that they desire.

Mr. Fallon: Hon. Members will agree that children should leave school fitted for the world of work. We want schools to have more flexibility so as to ensure better and earlier vocational training alongside more traditional academic achievements.

Bradford CTC

Mr. Cryer: To ask the Secretary of State for Education and Science what is the amount of grant paid in 1990 and 1991 to the most recent practicable date to the city technology college in Bradford.

The Secretary of State for Education and Science (Mr. Kenneth Clarke): Total grant aid to the Bradford CTC was £2·9 million in the 1989–90 financial year. For the 1990–91 financial year, the total grant was £4·7 million.

Mr. Cryer: Is not it outrageous that those sums were paid to an elitist private school which is needlessly duplicating the local authority provision, when the total amount of capital expenditure for the whole of the Bradford local education authority in the current year is about £9 million? Does the right hon. and learned Gentleman realise that there are expanding rolls in Bradford and that at least £30 million is needed to repair many of Bradford's crumbling schools, to provide permanent extensions and to replace the more than 500 temporary classrooms that are now in use? Are not the Government's priorities typified by J. K. Galbraith's phrase "private affluence and public squalor"?

Mr. Clarke: I have never heard such nonsense. Capital allocations to local government this year have been increased ahead of inflation. Bradford receives an allocation of £9·4 million for its schools and that sum has not been affected by the further sum that has gone into Bradford to invest in its splendid new city technology college. It is an essential part of effective inner city policy that the extra money provided should not just be spread over every deprived borough in the country, allowing each to carry on doing a little more of what was being done already, but should be invested. The Bradford CTC is a spectacular example of what can be done to provide opportunities for children of all abilities from deprived parts of Bradford, to raise expectations and to bring about new good practice in the education system of Bradford. The subscriptions of parents and the opportunities, which people are seeking, to teach and to be taught in Bradford show that this is a valuable new asset to the city for the education of people from deprived backgrounds that would not have come about without the CTCs.

Sir Marcus Fox: Is my right hon. and learned Friend aware that the Bradford CTC is proving extremely popular with teachers and pupils, that there are more than 1,000 applications for 12 teaching posts, and that this year, 660 students applied for 250 places? Is not that proof of the college's success, and is not that what the hon. Member for Bradford, South (Mr. Cryer) detests?

Mr. Clarke: I am grateful to my hon. Friend. Far more parents want to send their children to city technology colleges than there are places for them. There are also far more children waiting to be taught in them than can be admitted, and the teaching posts are hugely popular and sought after. I know from meeting people who are already teaching in the CTCs of their enthusiasm for, and commitment to, new methods of delivering high technology education, and that is one of the more exciting aspects that I encounter in the course of my job. The opposition of the Labour party to CTCs is unbelievably mean minded and small minded. Its view appears to be that the education system of Bradford should not enjoy a valuable innovation of this kind until every other school can be exactly the same.

Nursery Education

Mr. Allen McKay: To ask the Secretary of State for Education and Science what discussions he has had with local education authorities regarding the report on nursery education "Starting with Quality".

Mr. Eggar: "Starting with Quality" dealt with the educational experiences of the under-fives across various settings. It has been sent to all local education and social services authorities for them to consider how it might be acted on in their areas.

Mr. McKay: The Minister will have noticed that the report says in its introduction that one of its terms of reference was quality, but that quantity should also be considered. What measures has he taken to ensure that local government has enough finance to carry on expanding nursery provision so that there is a nursery place for the child of every parent who wants one?

Mr. Eggar: The answer is, a great deal. Over the past 10 years, the number of places available for nursery-age youngsters has increased by 150,000. This year alone we are providing local education authorities with £100 million more than what was spent last year on nursery education.

Mr. Evennett: Does my hon. Friend agree that universal provision of nursery education cannot be justified on grounds of cost, and that the present variety of provision for pre-school children is largely beneficial to the needs of children today?

Mr. Eggar: It is certainly difficult to understand how the priorities of educational spending could extend to cover universal nursery education as against some sort of assistance for young people under the age of five either in day care on in pre-school playgroups. The Labour party takes that view as well—at least the hon. Member for Derby, South (Mrs. Beckett), Opposition spokesman on public expenditure, shares that view. She made that very clear when she held my post about 12 years ago, when she could not find the resources either.

Ms. Armstrong: Does the Minister recognise that if the Government were prepared to switch the money that they have so far earmarked for city technology colleges to nursery education, we could have another 20,000 places this year? When will the Government accept their responsibilities, listen to His Royal Highness and recognise that they are responsible for giving our children the best possible start in life?

Mr. Eggar: The hon. Lady has not reached level 1 in maths. Even if the money were diverted from the CTC programme as her party advocates—it would amount to about £15 million a year at most—it would provide only 50 part-time nursery places for every local education authority in the country.

Mr. Walden: Is my hon. Friend aware that the introduction of sound and structured nursery education by a Conservative Government would be enormously popular with the women of this country who, I believe form an electoral majority? Is he also aware that royal assent for such a measure already exists in that the Prince of Wales recommended it in his speech yesterday? Will my hon. Friend talk——

Mr. Speaker: Order. Three questions are a bit much.

Mr. Walden: There are many things, Mr. Speaker, of which my hon. Friend should be aware.

Mr. Speaker: He may be made aware of two. Let us have the answer, please.

Mr. Eggar: I am grateful to my hon. Friend for yet again making me aware of his views.

Further Education

Mr. Lofthouse: To ask the Secretary of State for Education and Science when he last met representatives of local education authorities to discuss the funding of further education.

Mr. Kenneth Clarke: Funding issues are discussed in many of the meetings which I and my ministerial colleagues have with representatives of local education authorities.

Mr. Lofthouse: What proposals does the Secretary of State have for the expansion of post-16 education during the next two years? Surely he must agree that there should be some local democratic accountability in this crucial sector.

Mr. Clarke: We aim to continue the rapid expansion of education and training opportunities for 16 to 18-year-olds and my recent announcement about giving further education colleges and sixth-form colleges the same status that the polytechnics have used so successfully in higher education during the past two or three years was aimed at that. Extra resources are already going into that sector. The standard spending assessments for education authorities this year are up by 16 per cent. and inflation will be much lower than that in the forthcoming year. The hon. Gentleman's own excellent Wakefield district college had £2 million invested in it last year.

Mr. Waller: Does my right hon. and learned Friend agree that the removal of polytechnics from local education authorities has been a great success, setting

them free to develop and enabling many more students to attend a degree-type course? Does he further agree that to give higher and further education colleges the same kind of freedom would enable them to develop likewise and to be a similar success in future?

Mr. Clarke: I agree with my hon. Friend that giving independent status to polytechnics has proved to be an unmitigated success and they have made a major contribution to expanding the numbers in higher education during recent years. It is on that model that the principals of further education colleges and sixth-form colleges that I have met universally welcomed my proposals. They see the same opportunities for themselves providing a much broader range of opportunities for more young people both of an academic and vocational kind.

Mr. Fatchett: There will be widespread support for the Secretary of State's acknowledgement of the value of further education. Against that background, why are the Government cutting so substantially resources for youth training, much of which goes on in further education colleges, and why has virtually every Conservative local education authority cut its further education budgets? Why did the Secretary of State not pay one official visit to a further education college before he made his statement on 21 March about the future funding of such colleges?

Mr. Clarke: It is entirely for local authorities to decide how they use the increased resources that we make available to them, but it cannot be true that widespread cuts are being made in further education when the financial allocations to local authorities have increased by 16 per cent. compared with last year, in a year when inflation is likely to be 5 per cent.—a real growth of more than 10 per cent. If such cuts are being made, there is a substantial switch of resources by some strange local authorities into other things. Our policy is to give higher priority to further education. I do not think that the Opposition will oppose our policy. Further education is now getting more attention and encouragement than it has ever received in the past.

Mrs. Margaret Ewing: In the light of the recent announcement that consideration is being given to ensuring that there is one separate funding body for all the post-school education system in Scotland, what discussions has the Secretary of State had with his Scottish counterpart, given that that most surely has implications for his Department as well as for Scottish local authorities?

Mr. Clarke: With respect, it does not. I always tell Scottish National party Members that Scotland has a totally devolved system of government and I have no responsibilities for education there apart from those for higher education. I made my announcements in England after discussions with my right hon. Friend the Secretary of State for Scotland. The construction of funding councils for Scotland is a matter for him and he will take his decisions in the light of Scottish circumstances.

Mr. John Marshall: Does my right hon. and learned Friend agree that the polytechnics would get the scheme parity that they deserve if they were called universities?

Mr. Clarke: I am anxiously considering a number of matters relating to the present status of polytechnics and


universities. At this stage, I can say only that I will take my hon. Friend's opinion very much into account, as I always do.

Further Education Qualifications

Mr. Patchett: To ask the Secretary of State for Education and Science what proposals he is considering regarding the reform of qualifications for post 16-year-olds.

Mr. Eggar: My right hon. and learned Friends the Secretaries of State for Education and Science and for Employment are considering a number of proposals for improving qualifications for post 16-year-olds. We intend to publish a White Paper shortly, setting out our plans for education and training for the 16 to 19 age group.

Mr. Patchett: When will the Government sort out the jungle of post-16 qualifications and devise a system that meets the needs of the 1990s?

Mr. Eggar: The National Council for Vocational Qualifications has made significant progress, but there is still some ground to be made up. We hope to see considerable simplification of the existing vocational system over the next two years. I share the hon. Gentleman's concern.

Mr. Hannam: In welcoming the progress that has been made, may I ask my hon. Friend to consider in particular the problems that confront disabled students, who often do not reach the necessary standards of levels by the age of 16 and who need special help and attention between the ages of 16 and 19?

Mr. Eggar: Certainly.

Mr. Matthew Taylor: Does the Minister personally accept the argument that the present academic-vocational divide should be ended in favour of a single system? Does he agree that such a system should apply to those who leave school at 16 and that there should be guaranteed access to it by 17 and 18-year-olds, so that they may achieve nationally recognised qualifications, which may even lead them to a college or university education?

Mr. Eggar: We certainly need to dispel any idea of an academic-vocational divide, which is not helpful. We also need, as I believe the hon. Gentleman accepts, dramatically to increase the post-16, full-time staying-on rate. The hon. Gentleman's question raises a number of issues to which there are various answers, but I am broadly in agreement with him.

Reading Methods

Mr. Riddick: To ask the Secretary of State for Education and Science what plans he has to reform the training of teachers in reading methods; and if he will make a statement.

Mr. Fallon: We have asked the——

Mr. Bill Michie: What about my question, Mr. Speaker?

Mr. Speaker: I shall call the hon. Gentleman next.

Mr. Fallon: We asked the Council for the Accreditation of Teacher Education to conduct an inquiry into how

students are trained to teach reading, and to advise, before the end of the year, on whether any amendments are needed to the criteria used for course approval and whether further guidance should be given to institutions. My right hon. and learned Friend commissioned that inquiry in response to public concern and in the light of the professional advice received from Her Majesty's inspectorate and others. We see action on teacher training as one of the keys to the problem.

Mr. Riddick: Does my hon. Friend agree that it is appropriate that education questions should be on the Order Paper today, as it is Shakespeare's birthday? Does he agree also that the Prince of Wales was speaking for millions of parents when he voiced frustration at those educationists whose experiments in the teaching of reading have done so much to fail millions of pupils? Will he ensure that the inquiry that he has just announced is not subverted by those same educationists in his Department, local authorities and Her Majesty's inspectorate?

Mr. Fallon: I certainly agree with His Royal Highness the Prince of Wales. Teachers must be taught how to teach reading, which are the most effective methods and, above all, that teaching skills cannot be acquired simply by children browsing through books—as some of the shadowy education experts appear to believe. That is one purpose of the inquiry.

Mr. Andrew Smith: Will the Minister apologise to the people of this country for the Government's neglect of the teaching of reading in the past 12 years and for their abandonment, in 1988, of the national monitoring of reading standards? Does he accept that the Secretary of State and his predecessors have approved every teacher training course into which they are now launching an inquiry? Is not that a classic case of political buck-passing? Will the Minister and the Government accept responsibility where standards are inadequate and make way for a Labour Government who will put reading standards first?

Mr. Fallon: I was hoping that the hon. Gentleman was coming to the Dispatch Box to apologise for the incompetent performance of authorities such as the Inner London education authority, which ran schools like Culloden primary school in Tower Hamlets until April last year. This Government have introduced the Council for the Accreditation of Teacher Education, have revised the criteria and have now asked it to conduct an urgent inquiry into the methods of teaching reading.

Mr. Soames: What conclusion does my hon. Friend draw, and what implications are there for the training of teachers, from the excellent articles that appeared in The Mail on Sunday recently about the failure of teachers properly to teach children at Culloden school to read?

Mr. Fallon: It was parents who first raised the alarm at Culloden school. However, rather than attacking the messenger, I should have hoped that the head teacher and governors of the school would concentrate on the report by Her Majesty's inspectorate and the finding that, in more than two thirds of the classes in that school, the standards of reading were poor.

Mr. Speaker: I apologise to the hon. Member for Sheffield, Heeley (Mr. Michie) for misreading my Order Paper.

Seven-year-olds (Testing)

Mr. Bill Michie: To ask the Secretary of State for Education and Science what decisions he has made about the publication of the tests of seven-year-olds.

Mr. Eggar: I expect schools to publish their results this summer. They have certainly been encouraged to do so.

Mr. Michie: The Secretary of State must be aware of the concern about the publication of crude aggregate figures, which could lead to a false market in schools. Therefore, as I understand it, authorities such as Sheffield will not publish the results this year. Will the Secretary of State rethink the matter and allow local authorities the discretion to decide whether to publish?

Mr. Eggar: I have to say to the hon. Gentleman that, at the moment, parents make judgments about schools on hearsay, on subjective values. Surely it is right that where there are objective assessments of how a school is doing, that information should be in the public domain to enable parents to choose between schools on a better-informed basis.

Mr. Patrick Thompson: Will my hon. Friend confirm that the publication and provision of tests for seven-year-olds does not necessarily mean that our children are being branded as failures in any way? Will he explain to Opposition Members and others who are providing a misleading impression of Government policy that this is a good policy, that it is right for our young people and that it should not be misrepresented in such a way?

Mr. Eggar: I agree absolutely with my hon. Friend, who has much experience in this area. The purpose of the tests is to assess how children are doing and to identify weaknesses and strengths, so that weaknesses can be remedied and strengths further enhanced.

Ms. Gordon: Will the Minister explain the connection between the proposals to publish tests of seven-year-old children and the outrageous treatment of Culloden school, which will exacerbate children's problems and not help them? Is that an attempt to stampede parents, who know that the tests for seven-year-olds will be severely damaging to their children's self-image and self-confidence, into supporting them?

Mr. Eggar: I am extremely surprised at the attitude of the hon. Lady. HMI made an objective assessment of Culloden. I should have thought that it was in her constituents' interests to ensure that that school remedies the defects identified by HMI in a way that will benefit children and parents.

Grant-maintained Schools

Mr. David Nicholson: To ask the Secretary of State for Education and Science if he will make a statement on progress made in establishing grant-maintained schools.

Mr. Michael Brown: To ask the Secretary of State for Education and Science how many schools have opted for grant-maintained status; and if he will make a statement.

Mr. Kenneth Clarke: A total of 147 schools have balloted in favour of seeking grant-maintained status. Of

those, 127 schools have submitted applications and a further 20 applications are awaited. Of the 127 applications, 71 have been approved, 12 have been rejected and 44 have yet to reach me for decision.

Mr. Nicholson: Does my right hon. and learned Friend agree that where applications for grant-maintained status have local merit they will be supported locally, even by Labour councillors in the constituency of the Leader of the Opposition?
However, is my right hon. and learned Friend aware that a recent decision by his Department has caused great difficulty for secondary schools in Taunton, in view of the imbalance between schools in the north and the south of the town? Will he or one of his ministerial colleagues meet me and representatives of the local education authority to discuss how we may sensibly proceed?

Mr. Clarke: On the first point, I agree that supporters of grant-maintained status are to be found among governors and head teachers of all political persuasions. With regard to the second point, I know of my hon. Friend's discontent at the recent decision affecting schools in Taunton. The reasons for that decision were given to him. Officials of my Department have met officials of Somerset county council and I had my first meeting with the chairman of the council's education committee yesterday. When I hear the results of the contacts about how we should go forward I shall certainly consider whether I or one of my ministerial colleagues should have the meeting for which my hon. Friend asks.

Mr. Michael Brown: Will my right hon. and learned Friend note that, this very day, the parents of children at Waltham Toll Bar comprehensive school, in my constituency, are completing their ballot papers on the question whether they should seek grant-maintained status? As most grant-maintained schools are 30 per cent. over-subscribed, what advice does my right hon. and learned Friend give to those parents?

Mr. Clarke: Giving myself rapid legal advice, I must conclude that it would be most inadvisable to suggest how people should vote in the ballot, as an application would come to me for decision. However, I can confirm in general terms what my hon. Friend has said. The existing grant-maintained schools have been a huge success. The best advertisement for grant-maintained status comes from the teachers and parents. Anyone who visits any of these schools will find that it benefits enormously from the ability to control its own affairs.

Mr. Flannery: Why does not the Secretary of State occasionally talk about reality to the House of Commons? We expect it, but we do not get it. Only about 50 schools—he says 70, but people disagree—have applied for grant-maintained status. There are scores of thousands of schools in the country and virtually none—expressed as a percentage—have asked for grant-maintained status. Why does not the Secretary of State tell us the truth—that this policy is a complete failure?

Mr. Clarke: The number of schools balloted that are in favour of grant-maintained status has almost doubled during the five months that I have been in the Department. It is obvious that we are about to have a flood of applications. As for reality, I must tell the hon. Gentleman that there are not scores of thousands of schools in the


country; there are just a little over one score of thousands. I expect that, before very long, most of them will have grant-maintained status.

Mr. Straw: Is the Secretary of State aware that, in addition to The Times newspaper's description of the opting-out policy as "an evil", the Roman Catholic archbishop. and bishops have described it as "un-Christian"? The Conservative education chairwoman of Bromley education committee, Mrs. Joan Bryant, has resigned in protest at precisely the kind of disruption to local education that has been identified by the hon. Member for Taunton (Mr. Nicholson). Given that the Conservatives' prediction at the previous election was that 50 per cent. of schools would have opted out by now, whereas less than half of 1 per cent. have done so, why does not the Secretary of State accept that this policy is both educationally and morally bankrupt?

Mr. Clarke: Pretty silly things are said in local campaigns when ballots are held on grant-maintained status. However, to describe that as evil, un-Christian and morally bankrupt is going a little over the top about a policy that is a huge success in schools that have attained grant-maintained status. The hon. Gentleman frequently advises me to visit more schools. I trust that my diary allows me to d o so without cancellation. I advise him to visit a grant-maintained school and a city technology college, where he will see that his opinions are based on prejudice. He will encounter people who are achieving all the benefits of our very enlightened reforms.

School Places

Mr. Spearing: To ask the Secretary of State for Education and Science what special arrangements he makes for ensuring that there is sufficient provision of primary and secondary school places in areas under the planning control of urban development corporations.

Mr. Fallon: It is for local authorities to make proposals to ensure that there are sufficient school places available, whether in urban development areas, or elsewhere. My right hon. and learned Friend always considers proposals for new schools on their merits and in the light of all the relevant information that is available.

Mr. Spearing: Is the Minister aware that a memorandum that I sent to his colleague shows that in the London borough of Newham, south of the A13, which is an area as big as Earl's Court to Waterloo and Chelsea to the middle of Hyde Park, there is an abundance of primary schools but no secondary schools? As the borough lies within the area of the London Docklands development corporation and as large numbers of people are likely to move there, is not it the Government's responsibility to ensure that there are both primary and secondary schools in the area so that the population of Newham is not prejudiced? Where else in the country do such conditions exist?

Mr. Fallon: The fact that there is a successful development corporation at work in the hon. Gentleman's constituency, as there is in many other areas of the country, has nothing to do with school planning provision in that area. It is a matter for Newham and Newham

alone. I note that this year Newham has been allocated £8·6 million for capital expenditure on schools, as against £5·6 million last year.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Blunkett: To ask the Prime Minister if he will list his official engagements for Tuesday 23 April.

The Prime Minister (Mr. John Major): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Blunkett: Does the Prime Minister agree that under the proposed council tax the price of protecting the rich will be that the rest of us will have to pay more? Given that the Labour party proposes to protect the interests of retired people, does the Prime Minister believe that someone who lives alone but who has an income of £50,000 or £100,000 a year and owns two properties should or should not be entitled to an automatic 25 per cent. rebate on both properties, when a couple who are struggling just to make ends meet will get no relief at all? Is that what the Prime Minister means when he talks about developing a classless society?

The Prime Minister: As the hon. Gentleman will be aware, my right hon. Friend the Secretary of State for the Environment will make a statement, setting out the details of our new proposals immediately after Question Time. Whether people live in a large, small or medium-sized property, they will have to pay less under Conservative local government than they do under Labour.

Mr. Hague: Will my right hon. Friend reflect today on the great respect that there is in my constituency for the way in which he kept his nerve during the local government review and was not pushed into making a premature announcement? Would not it have been wiser for his political opponents to give him the credit for that, particularly as their policies are the result of three years of hand-wringing and head-scratching before they decided to go back to where they started from?

The Prime Minister: To be fair to the Opposition, the Leader of the Opposition did precisely what I did in terms of consulting and waiting before introducing proposals for his own tax. As he wrote in April 1990:
We are currently consulting widely with people in local government about our proposals. Our proposals have been planned and tested. Our aim is to get the system right rather than to announce it prematurely.
That is what we did and we were both correct to do so.

Mr. Kinnock: Does the Prime Minister think that Mr. Peter Morgan of the Institute of Directors was right to say today that this awful recession
is a failure of Government economic management"?
Is not it clear that, as a former Chancellor of the Exchequer, the Prime Minister must bear a special personal burden of guilt?

The Prime Minister: If the difficulties that the economy faces are solely the result of domestic economic mismanagement, it is an oddity that there are recessions in the United States, Canada, Australia, New Zealand, Sweden, Finland and in many other countries.

Mr. Kinnock: Last week's figures from the Government showed unemployment soaring and output and productivity collapsing. Today's figures show that imports and exports are wildly out of balance again, with imports rising twice as fast as exports. When all that is the case, is it any wonder that the Institute of Directors, like everyone else, understands very well that this is a recession hand-made in Downing street by the right hon. Gentleman?

The Prime Minister: If the right hon. Gentleman cares to examine the trade figures more carefully, he will find that export volumes are up on last year and import volumes are down.

Mr. Kinnock: In so far as there is any improvement year on year in the import figures, would it have been any wonder, when the right hon. Gentleman has flattened the economy, that imports should have been falling? Instead of that, imports are rising twice as fast as exports. Why is not the Prime Minister man enough to accept his share of the blame?

The Prime Minister: What we are flattening is inflation and interest rates; both are falling.

Mr. Forman: Is not it clear to my right hon. Friend and to the House that interest rates and inflation will fall in the remainder of the year and that it will be possible for economic recovery to come as a consequence? Is not it equally clear that any Government who had a policy of increasing the rates of tax on incomes, without telling the British people exactly what those rates and what that coverage would be, would be both working against the interests of recovery and not levelling with the British public?

The Prime Minister: My hon. Friend is entirely right. As he knows, inflation has fallen by nearly 3 per cent. since October and will show a further dramatic fall again next month. That has paved the way for five interest rate cuts. As my right hon. Friend the Chancellor of the Exchequer said this morning, the economic recovery will gather pace in the second half of the year.

Mr. Ashdown: Is the Prime Minister concerned that after 12 years of Conservative Government, one third of our seven-year-olds are still being sold short on the learning of their mother tongue, English? How can he explain that?

The Prime Minister: My right hon. and learned Friend the Secretary of State for Education and Science has made clear on a number of occasions the importance that we attach to the basics in the curriculum—the most important of all being English. If the right hon. Gentleman is so concerned about such matters, perhaps he will offer us his clear and unequivocal support for testing so that we can determine precisely what is happening and improve it.

Mr. Robert G. Hughes: Does my right hon. Friend agree that when the cost of the new council tax comes to be analysed per household, all policies should be taken into account? If a policy included the scrapping of any capping on local authority spending or the re-creation of the Greater London council, one thing is clear: it would cost every London household an absolute fortune.

The Prime Minister: My hon. Friend will know that the proposals of the Leader of the Opposition for local government would lead to a massive and costly disruption.

The Labour party proposes two upheavals: first, a return to the rates, which would mean massive bills for many people in different parts of the country; and, secondly, ever-rising bills because Labour refuses to cap spendthrift councils.

Mr. Lewis: To ask the Prime Minister if he will list his official engagements for Tuesday 23 April.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Lewis: Does the Prime Minister agree with the Secretary of State for Employment that there needs to be yet another job creation scheme to massage the figures before the next general election, or will he side with the Chancellor of the Exchequer, who wants nothing to do with it?

The Prime Minister: The hon. Gentleman would know, if he studied these matters, that we now have in place in this country the largest training programmes that we have ever had.

Mr. Ken Hargreaves: The Prime Minister will be aware from his visit to my constituency last week how much my constituents appreciate the community charge reduction scheme. Many couples benefit to the tune of £500, while families of three benefit to the tune of £800. Does he understand the anger of my constituents at the Labour party's action last Wednesday in trying to scrap the community charge reduction scheme?

The Prime Minister: I can certainly understand that. I think that anybody would be extremely angry indeed not only at the Labour party's plans for that, but on examining the details of what it proposes to replace the community charge with.

Mr. Martyn Jones: To ask the Prime Minister if he will list his official engagements for Tuesday 23 April.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Jones: Will the right hon. Gentleman confirm today that, despite the desperate need to improve his electoral chances at the next election, he will not be extending his safe-haven policy to representatives of other small, distant minorities, such as the right hon. Member for Plymouth, Devonport (Dr. Owen)?

The Prime Minister: I am at the moment fully occupied with dealing with safe havens in Iraq.

Mr. Oppenheim: Bearing in mind the widespread calls for Britain to adopt an industrial strategy, has my right hon. Friend ever met anyone who would like to go back to the days when we last had an industrial strategy, when British Airways was rated by passengers below Aeroflot, when British Steel was the world's largest loss-maker and when British Leyland was the butt of international jokes?

The Prime Minister: Certainly, as my hon. Friend intimates, I have never met anyone sensible who wished to return to such a process. But, of course, Opposition Members have policies remarkably like that, with the return of quangos, enterprise banks and all the nastiness of the 1970s.

Mr. O'Brien: To ask the Prime Minister if he will list his official engagements for Tuesday 23 April.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. O'Brien: Now that the Prime Minister and the Government have recognised the unfairness of the payment of 20 per cent. of the poll tax by the poorest people in the country, why does not he act now and abolish the 20 per cent. payment? Why is he planning to continue the misery and suffering of thousands of poorer families for a further two years?

The Prime Minister: The hon. Gentleman would be better employed asking his own leader why he should wish to abandon the community charge reduction scheme.

Mr. Beaumont-Dark: Does my right hon. Friend accept that it is surprising to hear the Leader of the Opposition praying in his support the chairman of British Petroleum, who spoke against the Government today, bearing in mind the fact that much of the inflation has been caused by petrol companies putting up prices more than they should and paying themselves more than they should? What lead is that and what example is that for the Leader of the Opposition to give to the rest of the country?

The Prime Minister: The statement by the chairman of British Petroleum was certainly odd in that respect, although he did make the very wise statement that pay settlements are often too high, that the labour market remains riddled with imperfections and that while it remains so riddled it is prevented from working properly.

Mr. Martlew: To ask the Prime Minister if he will list his official engagements for Tuesday 23 April.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Martlew: The Prime Minister, when being interviewed last week by Brian Walden on television, said that some of the principles of the poll tax need to be enshrined. Does the Prime Minister still stick with that statement, or is he going to change his mind again?

The Prime Minister: The hon. Gentleman has just invented a new definition of impatience. He need wait but a matter of minutes and he will know.

Mr. Andrew Mitchell: Will my right hon. Friend confirm that no Government under his leadership will ever introduce a national minimum wage? Will he confirm that such a policy would destroy jobs and massively increase unemployment, as well as wipe out the system of apprenticeships?

The Prime Minister: I can most certainly confirm all those matters. The estimate of the Department of Employment officials is that a minimum wage would cost between 750,000 and 1 million jobs.

Mr. Winnick: To ask the Prime Minister if he will list his official engagements for Tuesday 23 April.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Winnick: As the original poll tax was the beloved flagship of the Prime Minister's predecessor, is it surprising that some of the more ardent supporters of the right hon. Member for Finchley (Mrs. Thatcher) believe that the Government are betraying the true faith of Thatcherism again today? Is not it understandable that the right hon. Lady is pretty cross about the record of the Government since she left office?

The Prime Minister: I have never seen the hon. Gentleman as someone who could adequately reflect the views of my right hon. Friend the Member for Finchley (Mrs. Thatcher).

Mr. Sayeed: Will my right hon. Friend confirm that parts of the country such as Bristol would benefit from being unitary authorities and that the Government have no intention of following the Labour party lead and imposing regional authorities, which would mean just another tier of local government?

The Prime Minister: I can confirm that, but my right hon. Friend the Secretary of State for the Environment will also cover such matters in his statement shortly.

Ms. Armstrong: To ask the Prime Minister if he will list his official engagements for Tuesday 23 April.

The Prime Minister: I refer the hon. Lady to the reply that I gave some moments ago.

Ms. Armstrong: Does the Prime Minister recognise that he has a real problem in his Cabinet—a truant? What action is he prepared to take about the Secretary of State for Education and Science, who, during his period in the Department, has spent less than one working day in state schools?

The Prime Minister: When the hon. Lady sees the full range of proposals that my right hon. and learned Friend has prepared for education she, like everyone else, will be bound to applaud them.

Mrs. Currie: To ask the Prime Minister if he will list his official engagements for Tuesday 23 April.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mrs. Currie: Does the Prime Minister agree that the most significant aspect of local government finance is how much is raised and what the money is spent on? Does my right hon. Friend have a view on the proposal of the leader of Derbyshire county council and of some Members of the House that there should be no controls on council spending? Does he agree that that would lead to huge increases in bills under such councils?

The Prime Minister: I entirely agree with my hon. Friend. There have to be controls over levels of local authority expenditure, for two reasons—first, to protect community charge payers and ratepayers and, secondly, in the interests of the wider economy.

Local Government Review (England)

The Secretary of State for the Environment (Mr. Michael Heseltine): With permission, Mr. Speaker, I will make a statement about two consultation papers that the Government are publishing today—on the structure of local government in England, and on our proposal for a new council tax to replace the community charge.
The consultation paper on local government structure builds upon the announcement that I made on 21 March. As I made clear then, the Government intend no significant changes in the structure of local government in London or the metropolitan areas. In the remainder of England today, services are provided both by county councils and by district councils.
The Government believe that this structure of two tiers needs to be re-examined for the following reasons. First, unitary authorities are more clearly responsible for the delivery of services, and more clearly accountable for the bill local people are expected to pay. Secondly, two tiers may lead to excessive bureaucracy and duplication of effort. Thirdly, the Government are committed to developing the concept of enabling authorities. Councils will increasingly be able to take advantage of competition between those seeking to provide a service. It is therefore less important today to insist on councils of a particular size. Fourthly, the Government intend to increase the momentum of their existing policies to enable decision-making and responsibility to be more directly in the hands of the people. Fifthly, the present structures of local government do not win universal favour with local people, who have their own ideas about what sort of structure would best reflect local loyalties and communities.
We therefore propose to establish a body to draw up recommendations——

Hon. Members: A quango.

Mr. Speaker: Order. The House and the country have been waiting for this statement. Let us hear it in silence.

Mr. Heseltine: We therefore propose to establish a body to draw up recommendations for improving the structure of local government area by area, taking account of local views and the costs and benefits of the change. The proposed local government commission would consult on its recommendations and submit them to the Secretary of State. Final decisions would rest with Parliament.
The Government do not intend that either county or district councils should be abolished wholesale. In some places, it may be best for existing authorities to be merged; in others, the best approach may be to create or re-create quite different authorities. In some areas, there may continue to be two tiers. In all cases, the Government will expect a proper regard for economy and effectiveness of service delivery to feature in any new arrangements. The consultation paper maps out how this process would work and invites views.
The second paper sets out the details of the council tax with which the Government intend to replace the community charge. Subject to consultations, that will be in 1993. The House will know that the Chancellor of the Exchequer in his Budget announced a significant reduction in the amount of local tax revenue, to a level that the Government believed should be maintained in the longer

term. In consequence, the new tax will need to raise less than either the rates during their last years or the community charge during its first. So average bills can be substantially lower than the last average rates bills or the average community charges paid last year.
The council tax will have a property and a personal element. Each household will receive a single bill on the assumption that it consists of two people. Households with only one adult will be entitled to a 25 per cent. personal discount. This means that 90 per cent. of all adults will be taken into account in household bills. It is therefore not the Government's intention to provide for supplements for households with more than two adults. There will be no need for a register of council tax payers.
As each household will receive only one bill, the tax will be easy to administer. The amount of council tax payable will vary according to the value of the property but will vary only within a limited range. Properties in England will each be allocated to one of seven bands. There will be no need for precise valuations of every house or flat, nor need there be regular general revaluations. People in the lowest property band of property will pay about two thirds of those in a property in the middle band in the area. Those in a highest band property will pay about two thirds more than those in the middle band in the area. This means that a household in a highest band property will pay about two and half times as much as those in the lowest band. We shall avoid the very high bills which discredited the rates.
Each year the Government will announce for each band the amount of council tax necessary for a council to provide a reasonable level of service. The grant mechanism will remain broadly unchanged. This year, a council that spent reasonably would have charged a household of two or more people in a top band property no more than £668, and such a household in a lowest band home no more than £267. This year, households with one adult would have paid no more than £501 in the top band and no more than £200 in the lowest band.
People on low incomes will receive rebates in addition to any discount to which they are entitled. there will be no minimum contribution to the council tax. The maximum rebate for those at the income support level will be 100 per cent. Students, student nurses, apprentices and youth training trainees will be automatically entitled to personal discounts.
The council tax payable will relate to how much the council spends. Where councils spend more, all households will have to pay more. The same percentage increase will apply to all household bills. Similarly, the benefit of low spending will be passed through to all council tax payers.
The Government will restrain increases in local authority spending through capping. The threat of capping has been effective this year and we shall ensure that we have the powers appropriate to the new tax.
We shall ensure that no one faces an unreasonable increase in their bill between one year and the next as we change to the new system by the use of appropriate transitional relief.
Following the conclusion of our consultations in mid-June it is the Government's intention to introduce legislation to give effect to their conclusions in the next Session of Parliament.
Copies of the consultation documents and examples of council tax bills are available in the Vote Office and are being sent to all local authorities and their associations today.
The council tax will be simple and cheap to collect. It will require less of single adults than larger households. It will not impose excessive demands on any household. It will make a clear connection between what councils spend and what people pay. It will be seen to be fair.
I commend these proposals to the House and the country.

Mr. Bryan Gould: It still seems that the hardest word for the Government to say is "Sorry". Is it not remarkable that we have still not had a single word of apology from the Government for the billions of pounds that they have wasted, the chaos and confusion that they have inflicted, and the misery that they have caused to millions of people?
The Secretary of State's statement is, of course, an implicit admission that a disastrous mistake has been made. The pity of it is that the Government have not the guts to make a proper job of correcting that mistake. The party that brought us the head tax now offers us what it wants us to believe is a "stand on your head" tax. Whether it is heads or tails, the people remain the losers.
Some lessons have been learnt. On structure, the Government appear to be offering genuine consultation in contrast to the gimmickry that they offered on poll tax replacement. Provided that we are satisfied that there will be no political gerrymandering, that the appointments to the commission will be free from political bias and that no new attempts at undermining local government will be made, we intend to make a positive response to the Government's proposals on the subject.
Unfortunately, the lessons of the poll tax have not been learnt. The new proposals may have flown the poll tax nest, but they are still the product of a disreputable union between the poll tax and political panic—a sort of mongrel tax which inherits the worst features of both its parents. Is it not clear that the people will want to know whether the proposal will be as fast, as fair or as simple as the fair rates proposal which we have put forward and which every opinion poll shows to be at least twice as popular as any other proposal?
Is not today's announcement a guarantee that, with a Tory Government, the poll tax will stay until at least 1993 and until well beyond that date, according to the Institute of Revenues, Rating and Valuation and the Royal Institution of Chartered Surveyors? Is not the Secretary of State telling us in other words not that the poll tax will go but that it will stay? Why did not the Government take up our offer of co-operation on a short Bill, the Poll Tax (Abolition) Bill, which would ensure—[Laughter.]

Mr. Speaker: Order. We have a very busy day ahead of us.

Mr. Gould: Why did not the Government take up our offer of a Poll Tax (Abolition) Bill which would ensure that this year's poll tax bills will be the last? Why should people, for at least another two or three years, have to put up with all the unfairness and unworkability of the poll tax and with a local tax which, according to Chartered Institute of Public Finance and Accountancy, is £140 per household higher than it need be?
Why has not the Prime Minister learned that the unfairness of the poll tax made it so hated? Why are the Government at it again, skewing their new proposals so that the richest are protected from paying their fair share? Do not they realise that every pound that the rich do not pay will be added to someone else's bill—the bills of precisely the same people who were so hard hit by the poll tax? Why does the remaining element of a head tax, which counts for much of the total bill, still bear no relation to the ability to pay? It is the discredited poll tax principle all over again.
Why should a single millionaire get 25 per cent. off his bill while families or pensioner couples struggling on a low income must pay the full whack? How will the number of people in a household be confirmed if not by reference to the electoral register? Will not that mean an invitation to many people to trade their vote for the sake of a 25 per cent. reduction in their bill? What will be done about the "John Major problem"—the person who registers at one address but lives at another, perhaps more highly valued, property?
Why have the Government opted for an untried and excessively complicated new scheme based, I assume, on capital values? Incidentally, will the Secretary of State confirm that we are talking about capital values? If not, what is he talking about? What reliance can be placed on the Government's figures which, as no new capital valuation has been carried out anywhere, are totally invented and therefore arbitrary and misleading? Do the figures come from the same computers that assured us, less than two years ago, that the poll tax would average only £176? Will not the seven bands—no doubt reflecting the seven strands of opinion in the Cabinet—mean endless appeals and a disincentive to home improvement?
Does the Secretary of State recall the scorn that was poured on a property tax based on capital values by virtually all his Cabinet colleagues? How many of them does he now expect to resign? Does he recollect his predecessor, now the Tory chairman, describing his proposal as "a rottweiler's breakfast"? Were his colleagues being honest then, or are they being honest now? Does he remember saying that the more the Government considered a single person discount,
the more we became convinced that it helps significantly the better-off"?
Does he still hold that view, or is this another example of the celebrated Heseltine flip—or should it be flop? How long can he expect such flip-flopping to carry credibility?
How many of his colleagues does the Secretary of State expect to support the new tax in the Division Lobbies? How many of them will claim that this is the end of the poll tax and applaud it, and how many will condemn it on the same grounds? How many will claim, with equal vehemence—especially in Scotland—that the essentials of the poll tax have been retained? Which way does he expect the Prime Minister to jump on that issue—not so much the Heseltine flop as the John Major straddle?
Have not the Government, once again, failed to disentangle themselves from the poll tax? Are we not still paying the price of a Government who are too weak and too divided to summon enough nerve to kill it off? Even now, after 12 years and £14 billion, with a poll tax that costs the taxpayer £18 million per day, all we are offered is a consultation paper.
The consultation that will really matter will take place on 2 May and at the general election, when voters will express their determination to kill off this Tory tax once and for all by electing a Labour Government.

Mr. Heseltine: Yesterday, the deputy leader of the Labour party, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), said that the Labour Government would repeal our proposals. Today we have been told by the Opposition's Front Bench spokesman, the hon. Member for Dagenham (Mr. Gould), that they will adopt a constructive approach to them. If we have heard the constructive approach, I would rather have the old-fashioned opposition. When I listened to the hon. Gentleman suggest that the Government should apologise for our new proposals, when he speaks on behalf of a party that is committed to returning to the rates, which were described by the Leader of the Opposition as the "most unjust" of all taxes, I found it mind-blowing.
The hon. Gentleman suggests that the issue of capital values has been invented. In fact, it came from the valuation officers. They are the people who would be involved with any revaluation of any sort, whether under the hon. Gentleman's proposals or under ours. The hon. Gentleman—[Interruption.] These valuations were provided to my Department by the valuation office of the Inland Revenue, and that is the only basis upon which any Government could carry out a proper assessment. I am asked by the hon. Gentleman whether they would be working to capital values in relation to the property element, and the answer is yes. That is a simple answer.
It was suggested by the hon. Gentleman that our system was complicated. If the House refers to the Labour party's document entitled "Fair Rates", it will discover that its method of valuing properties is based on building costs, repair costs, rental values and capital values. And then there are personal discounts. That is precisely a formula for complication.
When we consider the certainty of the proposals that we are putting to the House, the Opposition fail by that test. They are not offering us an alternative. Instead, they are offering us an alternative next year of a return to the rates. That will be followed by another upheaval by moving to another tax in the following year. They cannot give any indication whatsover of what that tax will be. If anyone had any doubts about the wisdom of what the Government are doing, they will have none after listening to the hon. Gentleman.

Several Hon. Members: rose——

Mr. Speaker: Order. The whole House heard the Secretary of State for the Environment say that he has announced a consultation document, and I have no doubt that we shall have plenty of opportunity to discuss it between now and June—[Interruption.] Order. I must take into account the fact that there are two more statements to be made before we consider the Ports Bill, to which 18 groups of amendments have been tabled, which will be followed by consideration of a training levy order. I shall allow questions on this statement to continue until 4.30 pm. We shall then move on to the Welsh statement, and after that the Scottish statement.

Sir Norman Fowler: May I first congratulate my right hon. Friend on his statement? Is he aware that the reaction from the Labour party demonstrates that its fox has been shot? Will he remember that one of the things that helped to ditch the community charge was the level at which that charge was introduced? Therefore, the public will welcome his assurance that the charges will be introduced at the level that he has set out to the House.

Mr. Heseltine: I am most grateful to my right hon. Friend. The House will understand that the figures that I have introduced are based upon this year's budgets, as adjusted for the different costs of collection, and percentage of collection, to bring us into line broadly with the sort of calculations that the Labour party has been parading. I believe our figures to be accurate and consistent with CIPFA, whereas the Labour party's figures are not. Indeed, they have been disowned significantly by CIPFA during the past few days.
We are determined that levels of expenditure are kept under control by tight capping regimes. Right hon. and hon. Members will want to view with suspicion any calculations of the Labour party, because the Labour party will remove any constraints on the expenditure and conditions of local government.

Mr. A. J. Beith (Berwick-upon-Tweeed): Is it not clear that what the Secretary of State has produced is not son of poll tax but son of rates, preserving many of the faults of the rating system while not being based firmly on ability to pay, as a local income tax would have been? Does the right hon. Gentleman agree that a relatively low earning couple will find themselves paying the same as a four-earner family next door? Why has he tilted the system to ensure that the very rich pay very little more than those on low incomes? Will people be able to appeal if they believe that their property has been placed in the wrong band, and how many appeals does the right hon. Gentleman expect? Does the right hon. Gentleman agree that the poll tax will be with us until at least March 1993? What will next year's poll tax bills be like?

Mr. Heseltine: The hon. Gentleman will know that when we brought about the substantial reductions in the headline charge and introduced the community charge reduction scheme, the Chancellor said that we intended to preserve the new balance broadly struck between what was raised locally and financed centrally. I do not expect there to be a significant number of appeals—although, of course, the procedures will provide for appeals—because we shall be talking about a banding system, and I do not think that many people will wish to query the bands in which they find themselves—[Interruption.] The hon. Gentleman is as aware as I am that our system has been designed to constrain the level of charges at the upper end.
We must take into account the fact that in the present circumstances, where certain authorities in this country are quite uninterested in any concepts of fairness, the Government have a responsibility to be sure that no one is expected to pay a disproportionate charge as a result of high-spending authorities.

Mr. Cranley Onslow: I thank my right hon. Friend warmly for confirming the Government's commitment to a system of financing local councils that people will recognise as being simple to administer, easy to


understand and fair in its application, in contrast to a Liberal policy that would cost at least 3p on everyone's income tax and a Labour policy the cost of which the Leader of the Opposition either does not know or dare not reveal.

Mr. Heseltine: My right hon. Friend is absolutely right. Under the proposals of the Liberal party, across the country on average, for every £10,000 of taxable income, the taxed person would pay £330 towards the local services, and that would be extremely punitive at certain levels of income.

Mr. John Fraser: Since the element in the expenditure of local authorities which is paid for by central Government and the uniform business rate will remain the same, will not the new system mean that there will be vast variations in the council tax between one local authority area and another, the multiplier effect meaning, in effect, that if local government expenditure is increased by about 1 per cent., the rates bill—or whatever one might care to call it—will then go up by about 6 per cent.?

Mr. Heseltine: There will, of course, be variations, because it is the Government's intention that, where local authorities indulge in high spending, the consequences of the excess spending fall on the local council tax payers. Equally, where local authorities spend reasonably, or underspend, the benefits will flow through to their local council taxpayers.
When right hon. and hon. Members have had an opportunity to examine the exemplifications, they will see that that principle is followed through and that in certain areas—for example, Wandsworth and Westminster—very low charges are possible as a result of the arrangements that we have made, whereas, on the other hand, in certain authorities, significantly higher charges flow from the decisions of the local authority.

Miss Emma Nicholson: I congratulate the Secretary of State warmly on retaining the keynote features of the community charge in the new council tax— fairness and accountability—and I am confident that the new tax will be widely honoured. 'Will he remind the public that, while he is accepting consultation with members of Her Majesty's Opposition, so far they have been able to offer the electorate only a pot of fool's gold?

Mr. Heseltine: I strongly support my hon. Friend's view. The incidence of people to homes in this country show that a very high proportion of people come within a local tax, assuming two persons per household. About 38 million out of 42 million will broadly come within the incidence of our proposals, and many of the people in the remaining category will have been left out as a result of the arrangements that we have announced.

Mr. Gerry Steinberg: Is the right hon. Gentleman aware that the reaction of his hon. Friends today is similar to their reaction when the poll tax was introduced? It will be interesting to note the situation in a year from now.
A terraced house on the periphery of my constituency is worth, say £40,000. A similar property in the city centre is worth £130,000 or £140,000. Will both be in the same band?

Mr. Heseltine: They would not: they would be in bands some way apart to reflect those figures, because it is to be presumed that people living in a property worth £40,000 are likely to have a lower income than people living in a property worth £120,000.

Mr. Nigel Lawson: While agreeing with my right hon. Friend—[Interruption.]

Mr. Speaker: Order. Mr. Lawson.

Mr. Lawson: Thank you, Mr. Speaker.
I agree with my right hon. Friend that, if there is to be a local tax at all, it should be a property tax based on capital values—that is clearly the right answer—but is he aware of the widespread relief that there will be throughout the country both that the Government have had the courage and common sense to consign the poll tax to oblivion, and that they have come to a firm decision as to the nature of its replacement?

Mr. Heseltine: I am extremely grateful to my right hon. Friend, whose views on this matter are very close to my own.

Mr. Alfred Morris: The right hon. Gentleman said not a word about the special problems and needs of people with severe disabilities. Will he be restoring to them the benefits of the Rating (Disabled Persons) Act 1978 so that they will no longer be penalised if they require a larger house or an extra room?

Mr. Heseltine: Yes, I can confirm that.

Mr. Robin Maxwell-Hyslop: Will my right hon. Friend ensure that the boundaries of the economic regions are reviewed, because they are the basis on which housing investment programme payments and transport supplementary grants are made initially, and they have never been set by the Boundary Commission for England or pursuant to any criterion laid down in any Act of Parliament—or even in a statutory instrument?

Mr. Heseltine: I am interested in what my hon. Friend has to say. When he looks at the exemplifications of our figures he will find that the concept of a national band works perfectly acceptably. I shall look into the matter of the boundaries of economic regions and write to my hon. Friend about it, although I do not think that it relates to this matter.

Mr. William Ross: I listened carefully to the right hon. Gentleman and I thought that I heard him talk about structure and finance, but not a single word did he utter about the functions of local government or about how major functions such as the police and education will be funded. Will they be covered in the review?

Mr. Heseltine: Yes, I am grateful to the hon. Gentleman. The consultation document lists the existing functions in the various tiers of local government and states that we are working on the assumption of those functions being as they now are, or of changes clearly envisaged in Government plans. I also referred in my statement to the idea of the enabling authority which has significant implications for function delivery; but it is for my various colleagues in the Government to announce any changes relating to their functions from time to time.

Mr. Paul Channon: Apart from the welcome announcement that my right hon. Friend has made about the council tax, and in particular about its level, which will be most acceptable, will he say a little more about proposals for changes in local government structure, which will be widely welcomed? When does he think that changes in the area,s about which there is not a great deal of controversy will take place on the ground?

Mr. Heseltine: The Government are going to proceed area by area. I hope that the first of the new authorities will come into existence in April 1994. I very much welcome what my right hon. Friend has said. We shall be looking at the matter area by area, and we expect a disparate pattern to emerge in the light of local circumstances.

Mr. Dave Nellist: Given that the Secretary of State has said today that the poll tax is dead, but not until 1993, how will he answer those with suspicious minds who will say that this has more to do with the pre-election strategy of the Tory party than with serious policy? He introduced a Bill to reduce this year's poll tax bills by £140 and his colleagues brought in the School Teachers' Pay and Conditions Bill, so why does not he bring in a Bill today to abolish the poll tax?
What is the right hon. Gentleman going to do about the fact that, by all estimates, 18 million people have not paid all last year's poll tax and many of them have not paid any of it? Why has he said nothing today about the court cases, the bailiffs and the prison sentences? If he thinks that the poll tax battle is over, he ain't seen nothing yet.

Mr. Heseltine: The hon. Gentleman is a living example of why his party has thrived so long in opposition and will continue to do so. It is precisely that sort of attitude which reflects so clearly in the judgments that we have to make about the way in which Labour authorities behave. The hon. Gentleman asks about pre-election announcements. The Conservative party is quite keen on winning elections. I know that the Labour party does not expect to.

Mr. David Wilshire: Will my right hon. Friend confirm that his new proposals contain a transitional relief scheme to help the introduction of the new system, discounts for single people living alone and a capping mechanism to stop the worst excesses of the loony left? Is he aware that none of those advantages figures in the Labour party's proposals, which shows that it still does not understand how to finance local government?

Mr. Heseltine: I am most grateful to my hon. Friend. We shall have discounts and exemptions to deal with those people whom I have listed. We are determined to intensify the capping regimes to bring down local expenditure and, therefore, local council taxes. We certainly will have a transitional relief scheme, but I am in something of a difficulty, when it comes to the Labour party's proposals, because its published documents say that it will have a transitional relief scheme, but its chief spokesman says that it will not.

Mr. John Cartwright: Does the Secretary of State accept that banding simplifies administration but it involves an element of rough justice because the amount to be paid depends on the property band in which one's home is placed? Will he therefore reconsider his suggestion

that not many people would seek to appeal against the banding, particularly if there is to be no individual valuation of properties?

Mr. Heseltine: No, I think that, when hon. Members have had a chance to look, they will find that the difference between the bands means that people will be unlikely in large measure to seek to take advantage of an appeal procedure. But I do not wish to make an issue of that. The procedure will be there, and people will be fully entitled to make use of it.

Mr. Michael Jopling: Is my right hon. Friend aware that his new proposals, on which he and the Government should be congratulated, will immediately produce a situation that will be broadly seen as fairer than the community charge and the rating system, and levels of payment which are broadly acceptable? Can he confirm that future house values will be based on current values rather than on rebuilding costs? If so, is he aware that that will ensure that older, traditionally built houses will not be clobbered merely because they have immense rebuilding costs?

Mr. Heseltine: I am most grateful to my right hon. Friend. I agree that the tax will be seen as fair and acceptable. I can confirm that under our announcements there will be no reflection of the rebuilding costs in the valuations. The property element will be based on capital values. At the same time, it must be made clear that one of the complications of the Labour party's scheme, as I understand it—I confess to a certain rudimentary knowledge of that—is that it will have rebuilding and repair costs and property and rental values all in one package, if that can be believed.

Mr. Joseph Ashton: Will the Secretary of State give an assurance that we will now see an end to the nonsense of Westminster and Wandsworth receiving massive bribes and handouts while Bassetlaw district council in my constituency never received one penny in rate support grant for 10 years and, morever, lost the high rates that it used to get from the pits and power stations? Will we now see an end to that unfair system, so that all councils have handouts that bear some relation to their needs?

Mr. Heseltine: The hon. Gentleman only has to look at the disposition of grants to inner-London authorities to realise that neighbouring Labour councils receive significantly more than Wandsworth. The result is that Wandsworth and Westminster, by prudent housekeeping——

Mr. Ashton: What does that have to do with it?

Mr. Heseltine: Because I was asked about the distribution of grant, as though that is something which is totally reflected within the level of charges—it is not. The hon. Gentleman will discover that it is not just grant distribution that influences charges but local authority spending decisions. That will be seen in exemplifications across the country. I confess that I do not have before me the figures for Bassetlaw, but I shall be surprised if the situation is as the hon. Gentleman suggests. Nevertheless, I will write to him.

Mr. Anthony Steen: I congratulate my right hon. Friend the Secretary of State on his welcome


statement. For most people, the important thing will be the bottom line. Will my right hon. Friend confirm that, in rural areas such as Devon, the majority of households will pay less under his new scheme than they would under the old rating scheme, if it had been uprated from 1973 to 1993?

Mr. Heseltine: My hon. Friend, of course, is right in realising that the big switch made by my right hon. Friend the Chancellor of the Exchequer in his recent Budget brings about a result broadly on the lines that he suggests. Council taxpayers in Devon, for example will benefit significantly from the fact that their county council is within 0·1 per cent. of the level of reasonable spend.

Mr. Greville Janner: Does the Secretary of State acknowledge the very real problems confronting excellent city councils such as Leicester, which are struggling desperately to provide worthy services to their citizens under the weight of the chaos caused by the poll tax? Does he accept that that chaos will inevitably continue for at least two more years? What transitional relief does he propose, if any, to allow councils to do their job of serving their citizens in their areas?

Mr. Heseltine: Leicester would probably do better if it had kept down its community charge, and went on to keep its local tax down.

Mr. Janner: But there would be no services.

Mr. Heseltine: It is no use the hon. and learned Gentleman making that argument, because Conservative authorities all over the country are providing services that are more than adequate, at very much lower levels of cost.

Mr. James Cran: I am sure that my right hon. Friend will be aware that my constituents are delighted at the opportunity that he is giving them to get rid of Humberside county council. As it has, in a sense, already been got rid of by a Boundary Commission report, should not that consideration be put at the top of the list to be drawn up by my right hon. Friend's new commission? My right hon. Friend will be aware also that my council is concerned about revenue support grant. Will he confirm that it is not set in ferroconcrete, and that he is prepared to consider further representations?

Mr. Heseltine: As to the grant distribution system, broadly speaking, we do not intend to change it—but we always listen carefully to representations about standard spending assessments. Switching SSAs in the direction of one authority invariably means that other authorities lose out, with consequent complaints. The Humberside issue has been proceeding along its own track and the Government have no intention of intervening to change the process that is at work.

Several Hon. Members: rose——

Mr. Speaker: Order. In the interests of all right hon. and hon. Members, I ask for single questions, as that will be fairer.

Mr. Harry Cohen: The Secretary of State is contrite about the 20 per cent. minimum community charge, and says that it will go under his new council tax. Why has he failed to bring a measure before the House to

abolish that charge from this year's poll tax, and from last year's and next year's poll tax? Unless he does so, people will continue to run up huge debts.

Mr. Heseltine: My right hon. Friend the Prime Minister referred to that aspect. The hon. Gentleman will he Cully aware that the changes announced by my right hon. Friend the Chancellor of the Exchequer in his Budget, and by myself in later statements, are of significant help to people on lower incomes.

Mr. Richard Tracey: My right hon. Friend will be well aware of the appalling record of the London borough of Lambeth, which never collected all its rates or community charge. Yesterday, my right hon. Friend's Department published figures showing that £30 million of Lambeth's community charge remains uncollected this year. Does my right hon. Friend believe that his new council tax will be collected by Lambeth, or is it a Labour council out of control?

Mr. Heseltine: My hon. Friend has raised a most interesting question, because it so happened that my hon. Friend the Member for Salisbury (Mr. Key) revealed the inadequacy of Lambeth's delivery in the matter of collecting its bills, and made it absolutely clear that it has nothing to do with the community charge. What it was about was the inadequate management of that authority. The fact of the matter is that Lambeth is owed £28·9 million in respect of rents, £28 million in domestic rates and £13·7 million in business rates. Anyone who wants to understand why Lambeth is responsible for charging people what is inevitably a high community charge, should have regard to its inability to collect the revenue to which it is entitled. Perhaps it is a chilling example of the concern that we have about Labour authorities that the Labour party has now been driven to the point where it has sacked the significant leaders of Lambeth council.

Ms. Dawn Primarolo: When the Government introduced the poll tax, they told us that it was done to extend democracy and introduce accountability, that it would be based on fairness and that it would be easy to collect. It was introduced with a chorus of support from the Government Benches. Now they tell us, after a £14 billion mistake and waste of money, that they will introduce another tax that will be fair, accountable, democratic and simple. Why should the electorate believe in the judgment of the Government? They know that this is an election ploy for a Government who will be defeated.

Mr. Heseltine: I was extremely interested in the hon. Lady's references to extending democracy, as she speaks for a party that has sacked the Labour deputy of Wirral council, and Labour councillors in Liverpool and Lambeth. If that is not curtailing democracy, I do not know what is.

Dame Elaine Kellett-Bowman: Will my right hon. Friend accept thanks from my constituents who live in low-rated houses and, because many of them are single households, also thanks from those who will be relieved about the 25 per cent. reduction on single households? Will he also accept our grateful relief that he is capping Lancashire?

Mr. Speaker: One question please, Dame Elaine.

Dame Elaine Kellett-Bowman: I missed one earlier.

Mr. Speaker: Bad luck, but only one question now please.

Dame Elaine Kellett-Bowman: Will the county council——

Mr. Speaker: Order. I must say to the hon. Lady that this is hardly fair to her colleagues.

Dame Elaine Kellett-Bowman: Will the county council be capped?

Mr. Heseltine: My hon. Friend has drawn my attention today and earlier to the overspending practices of Lancashire county council, which must be of considerable concern to her and to many people who live in her constituency. I appreciate her comments about the help that we have brought to people who live in low-rated houses. Certainly, we have introduced a community charge reduction scheme which will be of considerable benefit this year and we very much welcome the opportunity to extend the principle that people should be personally involved in this process by introducing the 25 per cent. discount.

Mr. Kevin Barron: Does the Secretary of State agree that the public humiliation that the Government have suffered over poll tax is well deserved, in view of the fact that the Conservative party allowed common sense to be overridden by party political ideology? More important, many thousands of people in my constituency are having to pay 20 per cent. of the poll tax or more, although they are very poor and can ill afford to do so. In view of that, why does not he introduce legislation to stop it now, before we have another two years of asking people for money that they do not have?

Mr. Heseltine: I should have thought that the hon. Gentleman would recognise that we are now discussing arrangements for the new tax for 1993, and I should have thought that he would welcome the fact that we have removed the minimum contribution.

Mr. Robin Squire: My right hon. Friend deserves the widespread congratulations that he has received this afternoon and that he will undoubtedly get during the next few weeks. Can I ask him to be on his guard lest the country at large considers that it has broadly two property taxes with no difference? Will he underline the three threats to widows, spelt out by my hon. Friend the Member for Spelthorne (Mr. Wilshire) and the fact that the valuation basis of the Labour party's proposals means there will have to be four separate values every year?

Mr. Heseltine: I very much welcome my hon. Friend's question and I hope that the Labour party will now take the trouble to spell out the implications of the figures involved in its new tax—not the one-year resting point on the old rates, but what it intends in the longer term.

Mr. Allen McKay: Will the Secretary of State, when deciding the terms of reference for the reconstruction of local government, including the financing of services, take into consideration the fact that the standard spending assessment has worked unfairly against some authorities? Will he consider whether there should be equalisation in the future?
On the tax itself——

Hon. Members: No.

Mr. Speaker: Just that one question, please, in fairness to other Members.

Mr. Heseltine: The hon. Member will read with interest what the consultative document says about parishes, and we shall undoubtedly hear his views, along with those of everybody else. I cannot add to what I said a few moments ago about standard spending assessments. We look at these matters constantly. In any system of distributing Government grants, SSAs have always given rise to controversy.

Mrs. Maureen Hicks: Does my right hon. Friend agree that, according to our interpretation, the word "fair" implies the protection of people from the excesses of high-spending councils? In contrast, the Labour party, with its so-called fair rates, would go back to the bad old days of no protection, when councils could spend exactly what they liked, with no control whatsoever and no protection for single people.

Mr. Heseltine: My hon. Friend is absolutely right. Perhaps the most worrying aspect of the Labour party's proposals is that the party cannot give any details whatsoever about them. Even worse, the Opposition would incite local authorities to continue the upward spiral of expenditure, with devastating consequences for some of the least privileged people in our society.

Mr. Jim Cousins: Can the Secretary of State give the House an assurance that finance from national taxes will be made available in sufficient quantities to hold local taxation permanently at the new level he proposes?

Mr. Heseltine: I am grateful for the chance to repeat that, when my right hon. Friend the Chancellor of the Exchequer brought about a new balance between local taxation and central taxation, he made it clear that the Government intended to maintain that balance.

Mr. Nicholas Winterton: I am sure that the majority of the residents of the borough of Macclesfield will warmly welcome a majority of the proposals that have been announced by my right hon. Friend today. I say so as those people live in a borough whose authority underspent SSA by 11·3 per cent. My question is a direct one, and concerns the future structure of local government. Does my right hon. Friend think it fair that Cheshire county council, which produced a figure that only just prevented it from being capped, and which is controlled by Labour with support from the Liberal Democrats, should be allowed to allocate £100,000 of hard-pressed ratepayers' and community charge payers' money for the purpose of defending itself against what the people may wish to do in the future with regard to a unitary or all-purpose authority at district or borough level?

Mr. Heseltine: Obviously I cannot prejudge any decisions about the way in which unitary authorities might operate in Cheshire. However, the commission is unlikely to be influenced by public relations campaigns involving high expenditure. It will want to give people a much fairer chance against the big battalions and bureaucracy.

Mr. Max Madden: As the poll tax is now universally seen as one of the most expensive political


fiascos in British political history, as well as being divisive and unpopular, will the Secretary of State do something to help the poorest this year and next year by bringing forward his proposals to cancel the minimum charge, by cancelling the 20 per cent., and by introducing a more generous rebate system? Does he realise that there would be Opposition support for an arrangement to rush legislation through the House to give real help now to the poorest people?

Mr. Heseltine: The hon. Gentleman is fully aware that the minimum contribution by the poorest people carries with it an uprating of social security benefits to enable them to make payments broadly in line with the 20 per cent. We are talking today about the system that is to be introduced in 1993—not about arrangements for the years between now and then.

Mr. Martin M. Brandon-Bravo: Given that my right hon. Friend is dealing with valuations in broad classifications, may I ask him whether he addressed the problem of the injustice of tax on home improvements, which was a feature of the old rating system, and would presumably be a feature of the Labour party's proposed system? Can I give my constituents an assurance that anyone who installs central heating or double glazing will not have to pay an extra tax, as under the old system?

Mr. Heseltine: I am grateful to my hon. Friend. We do not envisage that to improve or change one's home would cause a house to move from one band to another.

Mr. D. N. Campbell-Savours: Can I say to the Secretary of State that, just like the lettered number plate, this approach is very divisive and invites the worst form of coarse and vulgar consumerism? Can he imagine what will happen in two or three years' time when there are band A, band B and band G properties, with people wanting to indicate their social mobility by moving up bands? Does he not think that that is divisive?

Mr. Heseltine: I understand the hon. Gentleman's concern, but it is fair to say that the Labour party's "Fair Rates" document also referred to a banding concept. We have not suddenly introduced a new concept. The hon. Gentleman grossly exaggerates the effects of adopting the simple system that we have proposed.

Mr. James Couchman: Is my right hon. Friend aware that his announcement will come as very good news to the many thousands of my constituents who live in small, old terraced properties, who formerly paid low rates and who were very badly hurt by the community charge?

Mr. Heseltine: I am most grateful to my hon. Friend. When people have considered and understand the exemptions, I believe that those who feel that in recent times they have paid more than they ought to pay will be reassured.

Mr. Eric Illsley: The Secretary of State's powers of capping will affect local authority budgets, which are based on standard spending assessments. Last year, in the coming year and in years to come, they will be based on 1981 census data. Will he confirm that the standard spending assessments are to be retained under the new system, and that therefore all the

charge-capping problems will remain? Authorities such as mine will therefore not receive adequate grant support to reflect their social and economic needs.

Mr. Heseltine: I do not think that the hon. Gentleman's authority has been capped. The standard spending assessment system will be part of any mechanism for distributing central Government grant. Whether it is called the grant-related expenditure assessment, the standard spending assessment or the needs element, it will be there and will always create controversy. Each local authority will want more. The problem is that it will not be prepared to recognise that that is the position of every local authority.

Mr. Andrew Hargreaves: I give a warm welcome to my right hon. Friend's statement, but can he assure my constituents who, under the old rating system, suffered increases under a Labour-controlled council of up to 42 per cent. in one year, that that will be impossible under his proposals?

Mr. Heseltine: I shall look closely every year at the Government's proposals for capping arrangements. We intend to bear down on high-spending authorities. I hope that my hon. Friend will be content with a general answer today, since we have not yet begun to consider the rules that will apply next year.

Mr. Eddie Loyden: The Secretary of State will be aware that his statement will meet with the disapproval of the vast majority of the people of this country, since it does not address the problem that has been raised by a number of my hon. Friends: the fact that local authorities ought to receive what they require to meet their needs. Poverty, high unemployment and poor services in many of our cities will not be remedied by his statement. He will not con the people.

Mr. Heseltine: By and large, people have come to understand that Liverpool's problems were not created by the grant distribution mechanism. If that statement needs any reinforcement, the Opposition would not have needed to sack councillors standing in the name of the Labour party and to replace them with councillors who can do the job better.

Mr. Harry Greenway: Is my right hon. Friend aware of the extreme suffering of the people of Ealing, including students, nurses and others, in 1987 when the then Labour council increased the rates by 65 per cent? Will my right hon. Friend's proposals lead to discounts for student nurses and apprentices? Will they pay something, or will they pay nothing?

Mr. Heseltine: I am sure that the transfer of control of Ealing to a Conservative administration was like a great light coming over the horizon and I am grateful to have the opportunity to pay tribute to that. I can also confirm to my hon. Friend that, under the new arrangements, students, YT trainees, apprentices and student nurses will qualify for personal discounts.

Mr. Michael Carr: Although we welcome the right hon. Gentleman's consultation proposals on the structure of local government, can he give an assurance that any local authority structure that emerges will not ignore the special needs of rural areas?

Mr. Heseltine: That is a very interesting point, and it is one of the reasons why we have referred in the consultative document to the possibility of different patterns of authorities emerging. It is also one of the reasons why we have referred to the potential role of parishes.

Mr. Richard Holt: Will my right hon. Friend accept that his speech today—the content, the delivery and everything about it—in comparison with that of the hon. Member for Dagenham (Mr. Gould), which was poor, lacking in content and did not hold the attention of the House, will be widely respected throughout the country, not least in Cleveland? My right hon. Friend may like to learn at this stage that the Labour leaders of Middlesbrough, of Stockton and of Hartlepool councils have joined the Conservative leader of Langbaurgh council in asking for the abolition of Cleveland county council, as did the hon. Member for Hartlepool (Mr. Leadbitter) on Radio Cleveland yesterday, when he also warned his party against regional government.

Mr. Heseltine: I am most grateful to my hon. Friend for his praise, although he qualified it towards the end of his remarks. He would not expect me to be drawn on the relative merits of yes or no to Cleveland, although I know what a formidable advocate he will be on one side of the argument.

Mr. David Blunkett: I was going to ask the Secretary of State about the chip shop factor, which is when there is a chip shop on one side and a disco on the other. Without individual valuation, a person ends up paying just as much as the person who overlooks the local park. However, as I am confined to one question, may I ask him this? The question is simple. Taking the average amount that a two-person household would pay under Labour's scheme as £333 and using like with like, is it not a fact that, under the scheme announced this afternoon, the con tax would cost the same two-person household £400?

Mr. Heseltine: I think that the hon. Gentleman really asked two questions. First, he raised the issue of a chip shop on one side of the road and something else on the other. There is an appeals procedure which is perfectly open to anyone who thinks that he has been adversely affected. Doubtless that will now be seen as an incitement to every chip shop owner in the country to march towards Whitehall to appeal against what we are doing. We will treat them as fairly as chip shop owners deserve.
To go back to the hon. Gentleman's arithmetic, the fact is that if one has a similar sum to collect, the same number of people and the same number of properties, the average under any scheme must be the same.

Several Hon. Members: rose——

Mr. Speaker: Order. May I remind hon. Members whom I have unfortunately been unable to call that, if they table questions tomorrow to the Department of the Environment, they will be answered in a fortnight's time.

Local Government Review (Wales)

The Secretary of State for Wales (Mr. David Hunt): With permission, Mr. Speaker, I should like to make a statement about local government finance in Wales, and in particular about the Government's proposals for the new council tax to replace the community charge.
I will be consulting widely in Wales on the basis of the paper that we have published today. As right hon. and hon. Members will see from the consultation document, the new council tax provides for a single bill for each household based on the value of the property, with a discount for single-person households. There are provisions for transitional relief, rebates for the most needy and discounts for student nurses, and so on, as well as for single occupiers, and there will be no register for adults. I believe that the system will be fair, equitable and simple to administer.
The House is already aware of the substantial benefits for Welsh community chargepayers which I have recently been able to announce. The generous local government finance settlement for 1991–92 enabled local authorities to set community charges some £130 less than elsewhere in the United Kingdom. I was also able to make available a total of £62 million for the community charge reduction scheme. Finally, and most important, the Government have provided £300 million to reduce by £140 the community charges set by authorities throughout Wales. The upshot of all this is that the average community charge in Wales before the award of community charge benefit will not exceed £95.
The proposals announced today must be seen in that context. The new arrangements that we are proposing will provide for a fair and durable system of local taxation in Wales. I am placing in the Library exemplifications of the consequences of the new scheme. These are based on 1991–92 expenditure by Welsh local authorities and the current level of central Government support, to which I have already referred. The Government's intention is that the balance between central and local taxation established in my right hon. Friend the Chancellor's Budget statement should be broadly maintained in the longer term.
As I have said, I want to consult widely on the basis of the paper published today. There may be areas where Welsh circumstances are different from those elsewhere, and so the detailed arrangements for Wales may need to differ. I am asking local authorities and others to put to me their suggestions for the particular matters on which separate Welsh arrangements would be appropriate. I trust that Labour Members may now at last be willing to contribute to that debate and consultation, and I would also welcome further contributions from those who have already been willing to participate in the consultation process and have given me the benefit of their views.
I should just say a further word about local government structure and functions. I told the House on 21 March that I wished to consult further with local authority associations before taking matters forward. I met the associations on 11 April and am pleased to tell the House that we had a very positive and constructive exchange of views. I now propose to reflect on what was said to me and then, in the early summer, to publish a consultation paper


which, among other issues, will identify the facts which need to be borne in mind in considering any reorganisation.
Our review of local government finance functions and structure is making considerable progress. The Government intend to establish for Wales, as for Britain as a whole, a system of local government which can serve us well for many years to come. The consultation paper issued today is a major step forward in that process, and I commend it to the House.

Mr. Barry Jones: On structure, does the right hon. Gentleman agree that any commission in Wales must be able to generate cross-party support? Will he guarantee that the commission will not be packed with an anti-Labour membership? Will he now accept that Labour's policy principle in Wales of a single tier of most-purpose local authorities is already backed by the districts and counties of Wales?
Does the right hon. Gentleman realise that Labour's plans for changing the structure of local government were published several years ago, following extensive consultation? The right hon. Gentleman is riding on Labour's coat-tails here. He is engaged on a policy clothes-stealing exercise, is he not?
The right hon. Gentleman now gives weight to the consultative process, as he must. May I remind him that, in the 1980s, the consultations on the poll tax were nothing less than a sham—a bitter farce? When the representatives of the Welsh councils tell him that they want to return to the rates, with enhanced rebates, will he accept their advice?
Is it not true that, under the council tax, rich people in Wales will get special treatment from the Government? The banding exercise is not equitable. Will the Secretary of State admit that the hated poll tax will remain for a further two or even three years in Wales? That will be resented throughout Wales. Why does the Secretary of State not accept our offer of a Poll Tax (Abolition) Bill, which would speedily end a tax that is hated and rejected by all our people throughout the Principality?
Some houses in well-heeled areas of Wales are worth a quarter of a million pounds or more. The average price of a mid-Glamorgan house is but £31,600. Does the Secretary of State seriously recommend a tax under which the occupant of a mansion will pay only two and a half times the tax paid by someone in a humble home in the bottom band of the Government assessment? Are not the Government protecting the rich and the super-rich?
The Secretary of State, in his former office, played a special role in perfecting the poll tax. Now the central tenet of Government policy is to dump the poll tax. Has not the right hon. Gentleman repeatedly trumpeted the merits of that tax? Does he not carry special responsibility for the hardship, distress and anger that it has generated throughout Wales? Will he now apologise to the people of Wales for his special role in establishing the hated tax? He lacked credibility as he made his statement today.
Finally, does the right hon. Gentleman realise that, whatever panic-stricken stratagems he is prepared to adopt, the parliamentary skins of his colleagues will not be saved in Wales? The people of Wales will make their judgment on 2 May and in the general election that is soon to come.

Mr. Hunt: The hon. Member for Alyn and Deeside (Mr. Jones) did not know which way to jump, and he finished by jumping in all directions at once. First, he said that we had stolen his proposals. Then he said that the new tax was still the poll tax. I was totally confused, as were most hon. Members.
The hon. Gentleman's first question did not relate to anything that I said or to anything in the consultation document. He must have thought that I had announced a commission today, but I did not do so. I know that some of his friends in local government would like to have an independent commission to tell us in Wales what to do, but I believe that we can decide that for ourselves. I am not minded to set up a commission, and that decision has the strong support of all the district councils.
Secondly, the hon. Gentleman said that local authorities in Wales had agreed on their preferred form of local government. It is true that, when local authority representatives came to see me, they said that we should move towards single-tier local government, but when they were asked about the size and number of the single tiers, they did not agree among themselves. We must not let the hon. Gentleman pretend that the councils agree. The Government believe in facing up to the disagreements as well as to what is agreed, so that we can produce a solution that will last for many years.
I have read the Labour party's proposals for local government, and I asked a reasonably random selection of people in Wales whether they understood what the proposals meant. I did not find anyone who understood them. The hon. Member for Alyn and Deeside said that I had stolen the Labour party's clothes. The hon. Gentleman may be better dressed than I am, but his proposals have been covered in a cloak. I have simply snatched away the cloak so that people can see his proposals. He is right to recognise that some elements in our announcement today were in the Labour party's proposals, too, but they were subsquently denied.
Banding is one example. On 1 July, the hon. Member for Dagenham (Mr. Gould) prepared a confidential discussion document advocating a tax based on five bands of property values. Today, it was educational to hear the hon. Member for Dagenham attacking a proposal based on seven bands, having already accepted the nature of our proposal.
The hon. Member for Alyn and Deeside then said that the Government were merely returning to the rates. We are doing no such thing. The Labour party proposes to return to the rates, or rather, to something called a graduated rateable value. [HON. MEMBERS: "Oh."] Hon. Members cannot have read the document "Fair Rates". Rebuilding, maintenance and repair costs, and private rents, would be taken into account in calculating graduated rateable values. That would not happen immediately, however. First, it was suggested, we should return quickly to a register based on 1973 valuations. The spectacle that the Labour party offers, with its idea of a Poll Tax (Abolition) Bill, is that we should return immediately to the rates.
I remind the hon. Member for Alyn and Deeside that, in Gwent, where a contest is looming for a parliamentary seat, the Leader of the Opposition spoke about rates. He was in Pontllanfraith—[HON. MEMBERS: "What?"]. I am merely using the pronunciation used by the right hon. Member for Islwyn (Mr. Kinnock). He described all rates —[Interruption.] Labour Members should listen to the


words of their leader. They do not like what I am saying, but this is the system to which they propose to return. The right hon. Member for Islwyn referred to
the most unjust of all taxes—local rates.
Yet that is what the Labour party now proposes.
Yes, the voters will make a choice on 2 May. They know that to vote Conservative will be to vote for councils that cost them less and give better services, whereas to vote Labour would mean voting for higher spending and higher bills.

Several Hon. Members: rose——

Mr. Speaker: Order. I repeat what I said on the previous statement. I shall ask for single questions——

Mr. John Maxton: And short answers.

Mr. Speaker: —and I hope that the answers will be short, too. That would enable me to call all the hon. Members who have been rising. In any event we shall have to move on to the Scottish statement by 5.15 pm.

Sir Anthony Meyer: Can my right hon. Friend the Secretary of State reconcile what is left of the view of the hon. Member for Alyn and Deeside (Mr. Jones) with the football hooliganism of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who said that he would repeal the new tax before he even knew what it would be? The new tax is a huge improvement. Will my right hon. Friend tell us who will conduct the banding operation, and on what principles?

Mr. Hunt: We have been guided by the Inland Revenue valuation office in reaching the statistics in the exemplifications. We are now consulting on the way in which we shall deal with valuations, but in the consultation paper we rely on the Inland Revenue valuation office. We have included a provision, which we believe local authorities will welcome, to enable them to buy in local professional expertise and experience where they consider that to be necessary.
On the first point, I would ask the hon. Member for Alyn and Deeside (Mr. Jones) to consult not only the hon. Member for Dagenham (Mr. Gould) but the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). Either they intend to repeal their proposals, or they will have positive consultations. As I have said, my door is always open. Why will not the hon. Gentleman follow the example of the Conservatives, Plaid Cymru and the Liberal Democrats, and come in and consult properly?

Mr. Richard Livsey: Does the Secretary of State agree that today he has announced the introduction of another property tax? Does he also agree that he said on 3 March 1990:
How much more abominable than a tax on widows? But this is what the rating system is."?
Surely what the Secretary of State has announced is very similar to the rating system. Surely widows living alone in houses will be adversely affected. What about second homes? I gather that there will be a special dispensation for second homes, and that it will be far cheaper for second-home owners than for the people who live there permanently to live in Wales. What does the Secretary of State intend to do about that?

Mr. Hunt: On the question of second homes, I make it absolutely clear that I intend to consult. That is one element where, if people follow the lead that I wish to give, in Wales we may decide to introduce different provisions from those which will apply in England and elsewhere. The proposal in the consultation paper for. England does not meet the special problem of second homes in Wales.
Secondly, it is precisely to meet the problems of single-parent families and widows that we are introducing a special discount for single-person households.

Mr. Ian Grist: Does my right hon. Friend accept that no local authority tax will be popular and that the new tax replaces one which was uniquely unpopular because, uniquely, it asked every adult to pay? That was the underlying reason for the unpopularity of the community charge. In the new banding system, will the figures be absolute, based on valuation, or will a house be placed within a particular band between an upper and lower limit, without being identified by precise pricing? Does he also understand—

Mr. Speaker: Order. The hon. Gentleman has asked three questions. That is enough, thank you.

Mr. Hunt: The value of the banding system—originally advocated, I concede, by the hon. Member for Dagenham —is that it removes the need to have properties individually valued. The hon. Member for Alyn and Deeside (Mr. Jones) proposes not merely a return to the rates, with all their injustice, but revaluation within two years of every property in Wales. The banding proposal gives us an opportunity to move away from revaluations and to place properties within a band which everyone can see to be fair and equitable.

Mr. Ted Rowlands: May I ask the Secretary of State to remind the people of Wales that the poll tax will be maintained in 1991–92 and 1992–93? Even with transitional relief and the community charge reduction scheme, how much more will householders in my constituency have to pay for the perpetuation of the poll tax, even compared to his so-called fair system?

Mr. Hunt: Let me make it absolutely clear to the hon. Gentleman that I am willing to consult local authorities on the best and quickest way to move from the community charge to the new system. The first responses that I have had from them are that the date that I have announced is the earliest possible time at which the new system can be put in place. But the hon. Gentleman's constituents were paying £248 actual rates on average in Merthyr Tydfil. Under the same system and with the same proportion of local government expenditure raised locally, that would have risen to £291 this year. Under the proposals that I have announced today, in the hon. Gentleman's area the average bill per household in 1991–92 would be £112.

Mr. Dafydd Wigley: In welcoming the burial of the poll tax, may I ask whether the Secretary of State is aware that thousands of people are in difficulties this year? Can he ensure that such people are given some help to overcome the debts that they have built up? I have one specific question for the Secretary of State. Will he address the question of water rates? The consultation paper refers to the domestic water charges in Scotland and the possibility of bringing them into the orbit of the new


structure. Does that mean that there could also be a rebate system in Wales to help the much-beleaguered Welsh water rate payers?

Mr. Hunt: Nothing in the consultation paper deals with the water rates. On the hon. Gentleman's first point, we have a generous rebate system under the community charge. As he knows, under that rebate system, those who have to meet the 20 per cent. payment are allowed far more in income support than the amount that they actually have to pay. That is reflected in the latest figures for Wales, which show that not 90 per cent.—the figure used by the hon. Member for Alyn and Deeside in his calculations—but 96 per cent. of the community charge has been collected and that 98 per cent. of what local authorites expected to receive has been collected.

Mr. Ray Powell: We all know that the reason we are discussing a new proposal to replace the poll tax is the result of the Ribble Valley by-election. I do not want to go on for long, but a great deal should be said and many questions should be put to the Secretary of State about his statement today. Does he accept that the best way of consulting—I have listened to him mention the word "consultation" 20 times since he began his statement—is probably the by-election that will take place in Monmouth? If a Labour Member of Parliament is elected there, will the Secretary of State scrap the proposal that he has offered us today?

Mr. Hunt: The hon. Gentleman has his own views on why the proposals have been made. I believe that they represent a fair and equitable way to proceed. On consultation, I ask again why the Labour party has decided to throw a cloak over its own proposals and refused even to discuss them with me. Plaid Cymru, the Liberal Democrats, my colleagues in the Conservative party and the local authority associations have come to consult me. The only people who were absent front the consultations were the shadow Secretary of State and his colleagues. I repeat that my door is open and I am willing to consider and consult with the hon. Gentleman, as and when he is ready at last to come in and see me.
The hon. Member for Ogmore (Mr. Powell) should study the figures for Ogwr. If he does so, he will see that our proposal is a good deal for not only the people of Ogwr but the people of Monmouth.

Mr. Alan Williams: Does the Secretary of State realise that he has put on the most brazen performance today? He came to that Dispatch Box over the dead body of his sacred principle that everyone must pay. It is the most humiliating about-turn that I have ever seen from a Secretary of State for Wales. Does he accept that it is particularly worrying that he has said with pride that we are to have no commission to give independent advice in Wales? Instead, a man of past evangelical single-mindedness will impose a system by diktat.

Mr. Hunt: I do not think that the right hon. Gentleman listened. If he had done so and if he had also listened to the voices of the district councils in Wales, including those being raised in his local council election campaigns, he would realise that all parties alike would like to see us resolve the matter within Wales. Why does the right hon. Gentleman want a commission? Who does the right hon. Gentleman think could sit on some great independent

commission to tell us in Wales how to conduct our affairs? As far as I am concerned, we can do that in Wales with no help from a commission.

Mr. Geraint Howells: I am sure that the Secretary of State is aware that thousands of university students live in my constituency. Can he clarify the position of four students sharing the same rented house?

Mr. Hunt: They will all be covered by the personal discount. Unless there are two adults in the household, the students will get the maximum personal discount. I refer the hon. Gentleman to the consultation paper, which sets out the position clearly.

Mr. Win Griffiths: Does the Secretary of State regret not consulting widely about the introduction of the poll tax? Who does he believe was more correct a year ago in the Ogwr borough council chamber—he referred to that council earlier—was it a leading Labour councillor, Dick Power, who said of the poll tax:
This is ill thought out and a nightmare to administer"?
Or was it the leader of the Conservative group on Ogwr borough council, Councillor David Unwin, who said:
Next year, when we are deciding the poll tax for 1991–92, we will be wondering what all the fuss was about.
What does the Secretary of State think the former Prime Minister would have thought of that?

Mr. Hunt: I do not know what the hon. Gentleman is trying to do; does he want to go back and rehearse past battles? Ogwr will get a very good deal out of the proposals. Whereas the rates paid in Ogwr in 1989–90 were £332, the average bill per household in 1991–92 under the proposed system would be £108. I work very closely with David Unwin, and I look forward to his joining us in the House after the next general election.

Mr. Gareth Wardell: Since the community charge was introduced after hon. Members spent a great deal of time in Standing Committee considering the legislation, and since not one amendment was accepted by the Government, will the Secretary of State now put forward in a consultation paper to the Cabinet the proposal that the work that we do in Standing Committee is reformed to ensure that the Government do not remain intransigent to every good amendment?

Mr. Hunt: What I will rehearse again to the House is the fact that, whenever we discuss local government finance, we all should reflect that the actual level of every local bill depends on the spending plans of every local authority. That is true under any system. The clear message for everyone in Wales on 2 May is that, if they have Conservative councils, they cost them less and they get better services.

Mr. Alan W. Williams: On banding, will the Secretary of State confirm that people in the most expensive houses will have to pay only two and a half times what people in ordinary houses will pay? There is a much greater disparity in house prices, with the largest houses being 10 times as valuable as smaller ones. Would not a linear relationship between liability and house values be fairer? Is not the purpose of banding to protect people in very large houses and to protect the rich?

Mr. Hunt: No. When the hon. Gentleman has an opportunity to look at the documents which I have placed


in the Library, he will see that the vast majority of properties in Wales fall into the middle and lower bands; 5 per cent. of all properties in Wales fall into band G, which covers properties valued at over 200 per cent. of the average property. Those householders will pay two and a half times as much as those in lower bands. I believe that that is an adequate reflection of the fairness of the new system.

Mr. Peter Hain: Does not the Secretary of State agree that the logical flaw in his proposals for the reorganisation of local government is the absence of any strategic authority for the whole of Wales? Will he stop dithering on the subject and agree to set up an elected assembly for Wales here and now?

Mr. Hunt: Despite the hon. Gentleman's attempt to move from the Prime Minister to myself the "dithering" appellation, which failed as much with the Prime Minister as it will with me, I am not persuaded by the case that has been put to me on an assembly. [Interruption.] Yes, I have said this before and I will say it again and again and again. I still await an adequate explanation of how the work of such an assembly could sensibly interact with that of the Secretary of State. There was a noticeable lack of interest in the idea shown by the local authority associations that I met recently. District councils were very fully represented and many speakers put forward the same view as one from west Wales, who said that he did not think that we should even begin to think about setting up an assembly until we had resolved the whole question of the structure of local government.

Mr. Paul Flynn: Does the Secretary of State recall that I have written to him and asked him oral and written questions on the loony feature of the poll tax as it is administered in Newport? What will he say to the lady from Bassaleg and Rhiwderin who last night in The Argus asked why she should be paying £50 more in poll tax than people are paying a few yards away in Wentlooge? Is it not likely that the crazy system of the charge reduction scheme will be repeated in the new poll tax, which will be equally irrational, absurd and unjust?

Mr. Hunt: I do not know whether the hon. Gentleman was in the House when the shadow Secretary of State for Wales asked me a question, and also when questions were asked earlier by the shadow Secretary of State for the Environment. They both conceded that there was now an end to the poll tax. For the hon. Gentleman to continue to perpetuate this nonsense that the proposal is still the poll tax is an absurdity.
As to Newport, the hon. Gentleman will know that the community charge reduction scheme was based on the average rates paid in a community. That is the basis on which the calculation is made; it is very simple and easy to understand. In Newport, the average rates paid in 1989–90 were £381; in 1991–92 the average council tax per household will be £199. The people of Newport will be able to see how much they will benefit through the action taken by the Government both in resources and under the new system.

Mr. Alex Carlile: Will the Secretary of State remember that many farmhouses in Wales, for historical reasons which no longer apply, are substantial buildings, much larger in proportion than the income of those who occupy them and work from them? Will he advise the Inland Revenue of that to ensure that, when the district valuer has to band farmhouses, farmers do not find their homes put in an unfairly high band?

Mr. Hunt: Yes, I hope that hon. Members have understood that the proposal that I have brought forward looks at Wales as a country in itself. There is no transposition to Wales of values in England. We will adjudicate on our own values through the help of the Inland Revenue valuation office. That is clear.

Mr. Paul Murphy: Since the Secretary of State, more than any other member of the Cabinet, personally imposed the poll tax upon an unwilling Wales, since he personally presided over the squandering of over £100 million on administering the tax in Wales, and since, in trying to get out of the mess, he has plunged Welsh councils into financial and administrative chaos, how can he in all honesty remain in his job?

Mr. Hunt: It is quite disgraceful of the hon. Gentleman to say that his colleagues and my colleagues in local government have moved into administrative chaos. I have met the local authority associations many times. The one thing that I have said to them consistently and with great pride is that I believe that the way in which they dealt with the community charge system was an example to every other local authority in the United Kingdom. The way in which they have collected the community charge is an example to everybody else in the United Kingdom—viz. the fact that they have been able to collect 98 per cent. of what they calculated they would raise through the community charge system.
I take as much pleasure in abolishing the poll tax or community charge as I did in abolishing the unjust domestic rating system to which the hon. Gentleman's party plans to return Wales after the next election, if it were to come to office.

Local Government Review (Scotland)

The Secretary of State for Scotland (Mr. Ian Lang): With permission, Mr. Speaker, I should like to make a statement about the application in Scotland of the Government's proposals for the new council tax.
The consultation paper that the Government are publishing today describes proposals for Great Britain as a whole, and the new council tax will operate in Scotland in the same way as has been described for England and for Wales. I set as objectives in my statement of 21 March the requirement that the new tax should be easy to administer, that it should spread the burden as widely as possible, and that it should enable councils to remain accountable to their electors. I also told the House that the tax would have elements based both on the value of each house and on the number of people living there. All these objectives are achieved in the new council tax.
As elsewhere, for the purposes of assessing the property element in the new council tax, domestic properties in Scotland will be divided into seven bands centred on the value of the average Scottish domestic property. Each household will get a single bill. The tax will assume a two-person household, with a 25 per cent. discount for single households and 50 per cent. discounts for unoccupied properties. About 3·5 million adults in Scotland would therefore be taken into account; that is about 90 per cent. of the total. The discount, rebate and transitional arrangements will also be the same as in England and Wales.
I assured the House, in my earlier statement, that the new tax would not suffer from the defects of the old domestic rating system: that disproportionate burdens would not be placed on a small minority of households and that there would not be the unreasonable fluctuations that we had following revaluations. Those objectives are also achieved by the proposals that we have published today.
I am today placing in the Vote Office estimates of likely tax levels for single and two-adult households in each local authority area in Scotland in each of the proposed seven property bands. The majority of Scottish households are in the lowest three bands, where the average bill for a two-person household is £380 or less, and £280 for a one-person household. The range of bills depends on local authority spending decisions, but at this year's spending levels, bills for two-adult households would range from £260 to £730 throughout Scotland—the average being £420. However, if local authorities spent at the level of grant-aided expenditure—the basis for grant distribution—the bills would be much lower.
Two proposals in the consultation paper are specific to Scotland. I undertook in my earlier statement to ensure that the now reduced burden that local taxpayers will face is not increased, once again, to unacceptable levels by local authorities' spending decisions. I therefore propose to bring my capping powers into line with the powers of the Secretaries of State for the Environment and for Wales in order to achieve this. I also propose, as a consequence of the ending of the community charge, to introduce new arrangements for the payment of water and sewerage charges in Scotland. The proposed new system is the subject of a separate consultation paper, which I am also publishing today.
As I said in my statement of 21 March, I retain the right to vary details of the new tax slightly in Scotland, to take account of distinctive Scottish circumstances and to ensure consistency with the rest of Great Britain. At present, I see no need to exercise that right, given the satisfactory formula that we have now achieved for the new tax.
The consultation paper confirms that there will be separate consultation about the structure of local government in Scotland. I intend to publish two consultation papers on this subject, the first of which will appear in a few weeks' time and will deal with the broad principles that should underlie a reform and a possible move to a new single-tier structure.
I am confident that the proposals that we are announcing today represent a major advance in the way in which we fund local government in Scotland. They have my strong support and I believe that they will be well received in Scotland. I look forward to wide consultation on them, and I commend them to the House.

Mr. Donald Dewar: Seldom can a Minister have made a more embarrassing appearance at the Dispatch Box. The right hon. Gentleman has had to concede that, on the essentials, the Labour party has been right all along. He is here to bury the poll tax which he was once so determined to praise as a remarkable success story. The Secretary of State and the hon. Members for Eastwood (Mr. Stewart) and for Stirling (Mr. Forsyth) have been scathing in their denunciation of any form of property-based tax. Do they really believe that they carry credibility if they now argue the merits of exactly such a system? What explanation can the Secretary of State offer to hide the plain fact that the policy that he now advocates is demonstrably humbug and hyprocrisy? It is sad that, having accepted the general principle, Ministers have managed to get so wrong the practicalities dictated by logic and the Labour party.
I welcome the exemption from the present 20 per cent. rule for those on income support. It would be monstrous if those on subsistence incomes faced cuts to compensate for the increases allegedly to meet poll tax payments, as suggested in the consultation document. The consultation document also suggests that students, student nurses and those on youth training schemes will be entitled to personal discounts. At present, students pay 20 per cent. What will they pay under the new system? How many households in Scotland, and what percentage of the total households, will qualify for 100 per cent. rebates? Does not the Secretary of State recognise that Scotland expects the 20 per cent. rule to go now? If it will be wrong in 1993, when the new system will be introduced, it is wrong now.
A key objective of the Labour party has been to help people who were struggling to meet local tax bills. The 25 per cent. rebate system is a gesture that does not effectively target those in greatest need. How will applications for the 25 per cent. personal discount be checked? Will the Secretary of State guarantee that, whatever emerges from the muddled consultation document, the electoral register will not be involved? Otherwise, there will be a clear incentive for many people to opt out of the democratic process.
It is also clear that many of those who will benefit from that 25 per cent. discount are unlikely recipients of such help. Some will be well off, some young single people in employment and some single people living alone, but by no stretch of the imagination in financial difficulty. It is not a


targeted benefit but a clumsy device unrelated to the ability to pay. Help must be given, but surely it would be better to concentrate on a targeted scheme or an effective rebate system in which all the money available would be concentrated.
Why should I be offered a 25 per cent. reduction when so many of my constituents have been left in poverty? Is that a realistic and effective use of scarce resources? Can the Minister confirm that the cost of this 25 per cent. discount or rebate—perhaps he could give the figure—is not being met by central Government but will be paid for by higher contributions from other households?
Is it not the case that the system has been rigged to protect the better off living in top-range properties? Is not the key the Secretary of State for the Environment's threat that the amount payable will vary
only within a limited range"?
Are not those weasel words—a dishonest way of saying that those in modest houses will subsidise those who live in top-range properties? Will those proposals apply in Scotland and, if so, can it be right that the most expensive property in Newtown Mearns or Morningside pays, at the most, only two and a half times the most battered council house in Easterhouse or Pilton?
Will not the seven-tier banding system be cumbersome and complex and seen by many as rough justice? The Secretary of State has unveiled figures for what average bills would have been if his scheme had been in place this year. Clearly, to do that he would have required a valuation base. Can he tell the House what that was, whether it was based on capital values and who supplied it?
There is a rumour, which I find it difficult to believe in terms of its ingratitude, that the assessors' departments of local authorities, which have been martyred by their attempts to make an unworkable poll tax work, will now lose responsibility for valuation under the new system, and that, in Scotland, it is to be handed over to the Inland Revenue. Why? Is that a tribute to the tremendous job done by the Inland Revenue in keeping the valuation base in England and Wales up to date in recent years?
Is it not totally unacceptable that the system cannot be in place before 1993 at the earliest? If the Secretary of State started with the present valuation roll now, with drive and initiative, he could end the misery of the poll tax within a much shorter time scale than he sets out. Is it not essential that he does so? If the poll tax limps on for two full years it will destroy confidence and leave local government with appalling problems of collection. Does he not see that the faults that he is building into this Tory tax will hit services and, in a blatant attempt to placate those at the opposite end of the income scale, those, who are often the most vulnerable, who rely on those services?
If the new system means moving to the English system of standard spending assessments and fierce cutting powers that leave the Secretary of State as a virtual dictator, it will be no service to local democracy. The Secretary of State boasted that he would have great powers of discretion over the Scottish system. Is it all to boil down to restrictions imported from the Department of the Environment, a power to vary the details slightly, and a promise that, in any event, the powers will not be used, at least in the immediate future?
Can the Secretary of State define the powers that he has achieved and the battles that he has won in Cabinet? His answer to that question should not greatly elongate his reply. He must know that his folly and that of his Government has cost Scotland dear. We have suffered years of chaos, extravagance and destructive waste. His blind loyalty to a system that he now concedes is fatally flawed has damaged local democracy and divided communities in bitterness.
After a decade, the Government are back where they started. Those who are responsible still enjoy office and power, but this shameful story of malice and indecision will not be forgotten. The errors and miscalculations behind today's insincere charade will not be forgiven.

Mr. Lang: The hon. Member for Glasgow, Garscadden (Mr. Dewar) asked many questions and welcomed certain aspects of our proposals. He seems to be uncertain whether to welcome the scheme because he thinks that it is the same as rates, or to oppose it because he thinks that it is not. Let me assure him that the scheme is not the same as rates. The electorate will have a clear choice between our new council tax and Labour's "back to the rates" policy at the next election. If rates in Glasgow, and probably in the hon. Gentleman's constituency, had been retained, the average rate for a £75,000 house would be about £1,100. Our council tax would produce about £490.
The hon. Gentleman asked what students will pay. Students will be eligible for a discount. A student will be likely to pay the council tax only if he is a householder and owned a property. He will then be liable to pay for the property element.
The hon. Gentleman asked me who will qualify for rebates. The consultation paper indicates that those on income support—students, student nurses, apprentices and YT trainees—will qualify. We are, of course, consulting on the rebate scheme.
The checking of applications for discounts will be a matter for local authorities to decide on. I see no need for the electoral register to be involved in the process. The hon. Gentleman asked me whether discounts will be funded from within the local government system: yes, indeed they will. All our calculations take account of the likely number of discounts that will arise.
The hon. Gentleman referred to top-rate properties and suggested that our proposed banded arrangements will introduce protection for them. Yes, indeed they will. That will be one of the important differences between our proposals and the old domestic rating system. Under the old system, higher-valued property bore a grossly unfair proportion of the burden of local government expenditure.
I believe that it is right to have a system in which the range will vary no more than two and a half times between the top band and the bottom band, bearing in mind especially that the system will contribute about 11 per cent. of the total cost of local government spending in Scotland, the rest coming from business rates and a central Government through income tax, value added tax, and other such taxes.

Mr. Dewar: And VAT.

Mr. Lang: I said VAT.
The hon. Gentleman has suggested that the seven-tier banding system might be unwieldly and a form of rough justice. The very fact that there will be seven bands shows the range within which different types of property and


different values of property can be accommodated. It will lead to a smooth and progressive relationship with the liability of residents to pay within the bands. Valuation will be supervised by the Inland Revenue's valuation office. Private sector valuers will be used to achieve a valuation base and to locate individual properties within the bands. We are still considering the possible role of Scottish assessors in the system. If the hon. Gentleman chooses to consult us, we shall be interested to hear any suggestions that he has to offer.
We propose to introduce the new tax in 1993. I hope that the Opposition will give us as fair a wind as they can to ensure that we keep to that objective.
I have the power to vary any arrangement in Scotland so as to meet any difficulties that could arise for payers in Scotland as a result of the different nature of the Scottish domestic property base and the different levels of spending, and of central Government funding. I do not believe that it will be necessary to make use of that power because of the formula that we have achieved, but it remains in place.
When I reflect on the hon. Gentleman's peroration I reflect also on what the Leader of the Opposition said about domestic rates, which he described as the
most unjust of all taxes.
The right hon. Gentleman was right, and I am surprised that he is prepared to lead a party that wants to return to domestic rates.

Several Hon. Members: rose——

Mr. Speaker: Order. May I repeat to the House what I said previously'? The House knows that we are discussing a consultation document. There will be plenty of opportunities between now and June to discuss it further. As there are 18 groups of amendments to the Ports Bill, in which there is a great deal of interest, and a ten-minute Bill, I shall allow questions on the statement to continue until 5.55 pm. I hope that during that time I shall be able to call all those who wish to question the Secretary of State for Scotland. That should be possible if they ask only single questions. We shall start with Sir Hector Monro.

Sir Hector Monro: Does my right hon. Friend agree that, coupled with the current reduction of £140 in the community charge and his insistence on keeping down local government expenditure, the new scheme will be widely welcomed in Scotland? Will he say a little more about standard charges and any other anomalies that he has had to remove from the current community charge with the welcome changes that we have following the abolition of that and of the old rating system?

Mr. Lang: I thank my hon. Friend for the welcome that he has given to our proposals. He might like to know that the average bill for the two-person household in Annandale, Eskdale and Nithsdale would be about £290 under our proposals as we are illustrating them today. My hon. Friend is right to draw attention to the reduction introduced by my right hon. Friend the Chancellor of the Exchequer by which a switch of emphasis took place between local government and central Government, thus reducing the overall level of moneys required to be raised at local level.
My hon. Friend will know that the standard community charge was considerably modified over the past two or three years to remove some of the worst of the

anomalies. I believe that the system is much more stable now. To a large extent, the sort of arrangements that exist for the standard charge will carry over to the new arrangement.

Mr. Malcolm Bruce: Is it not extraordinary that, after the debacle of the past two years—the abolition of rates and the introduction of the poll tax—both the Labour and Conservative parties are now united in their commitment to bring back the rates with added confusions of their own? Surely it is extraordinary that the Secretary of State should be remitting the matter to the Inland Revenue. As it is qualified for tax assessment, would not it be more appropriate to ask it to assess for local income tax rather than property valuation, for which it is not qualified? Is it not a fact that capping will become a feature of the scheme, which makes accountability—the original claim of the Government—a mockery? For the next two years we shall continue to have the shambles of the poll tax, only worse.

Mr. Lang: Every hon. Member should reflect on the fact that we are putting a much more substantial proportion of resources into local government from central Government. It is important to ensure that that does not leak away in the form of higher spending by local authorities but goes to the benefit of local residents. It is important that we have an adequate capping mechanism.
The hon. Gentleman seemed to suggest that the proposals that we are now putting before the House are the same as rates. He could not be more wrong. Rates on a £50,000 house in his constituency would have risen to £540, compared with £250 under the council tax. A personal element is provided for within the council tax, and there is a banding of properties that affords a protection that the old rating system never did.

Sir Nicholas Fairbairn: I should declare an interest as chairman of Historic Scotland. May I ask my right hon. Friend to bear in mind—I think that it is a matter that will be borne in mind by Members of all parties—the fact that the value of a house is not a sign of people's ability to pay and that the fragility of the heritage of Scotland, of which I am privileged to be in charge, is an extremely subtle matter? If buildings that require normal duties of upkeep as part of the heritage of Scotland are to be burdened with a tax that has nothing to do with their upkeep, my right hon. Friend must be careful to ensure that the Government, in giving a grant for their upkeep, do not destroy them by the tax that is being introduced.

Mr. Lang: My hon. and learned Friend makes an important point. He is right to draw attention to the important advantages that will be derived by the owners of Scotland's historic buildings. It was precisely such buildings that bore an undue proportion of the domestic rating burden and a lack of incentive to improve and maintain. Now, because the burden will be more evenly and equitably spread, they will be protected from such burdens, and from the depredations of high-spending local authorities. That will lead to a continuing improvement in the quality of the fabric of Scotland's built heritage.

Mr. Robert Hughes: The Secretary of State, after turning somersaults on a full stomach, having eaten a bellyful of his own words, is understandably queasy and cannot focus on the main issues. Is he aware that the shambles that he has now produced means


that the poll tax will exist for another two years, that councils will be in great difficulty, that low-paid people will still not have the full rebates to which they are entitled and that we need swift action to move much faster than the right hon. Gentleman currently proposes, rather than wait for another two years? Will he think again, withdraw this nonsensical review and introduce proposals for a rapid change which, with the co-operation of the Opposition, he would get through?

Mr. Lang: We are moving as quickly as is sensible, practical and prudent, and I believe that the new system, when in place, will be found to work smoothly and effectively and be simpler and fairer than what has gone before. In the meantime, the fact that we have reduced the burden that falls on local government by a substantial amount as a result of the switch from local to central taxation will considerably reduce the difficulties and anxieties that people will face. In addition, as I said, I am taking powers to strengthen my ability to cap local authorities that overspend. If the need arises, I shall use such powers to protect residents from high spending.

Mr. Bill Walker: Will my right hon. Friend confirm that the sensible use of VAT to reduce bills will produce a bill for North Tayside for the lowest band of property of about £250 and for the highest band of about £600? If those figures are accurate, they show clearly that the new tax will be seen by the Scots as a big improvement on rates or community charge.

Mr. Lang: The figures that my hon. Friend uses sound about right to me. The arrangements that we are introducing into the new system will give protection to property owners, will ensure that local authorities are not able to impose an unduly high burden on them and will see that the burden is sensibly spread across the whole population.

Mr. Alexander Eadie: Does the right hon. Gentleman, in introducing this form of roof tax, make the same claim that the Secretary of State for Wales made, which is that, when the new scheme is introduced in three or four years' time, that will be the final death of the poll tax? Has the right hon. Gentleman costed the new scheme? For example, what will it cost to advertise and administer?

Mr. Lang: The hon. Gentleman is unduly pessimistic. I sincerely hope that it will not take three or four years to introduce the new tax. I hope that we shall be able to introduce it by 1993 and abolish the poll tax then, because this is an infinitely better and more efficient system. I anticipate that the costs of administration and collection will be substantially reduced over those of the poll tax.

Sir David Steel: I hoped that, as Scotland was lumbered with the poll tax a year earlier than England and Wales, the Secretary of State would be leading the campaign to get rid of it a year earlier than in England and Wales, instead of which he is reported as trying to fight a rearguard action to keep it. Will the valuations take account of the condition of property, given that there will not be individual house valuations, or will a person living in a large slum pay more than someone living in a small decent house?

Mr. Lang: As for the alleged reports to which the right hon. Gentleman refers, I hasten to reassure him that they are and were entirely without foundation. I have never read so much fantasising as I have in the last few weeks. The valuation process is intended to achieve as accurate a valuation as possible. It will not be such a detailed valuation as existed under the old rating system, and it will be open to any householder who feels that his property has been placed in the wrong band to appeal against that. The incentives will be that much less to do so because, with a range of seven bands, the variation in bills between the different bands will not be so substantial.

Mrs. Maria Fyfe: Will the right hon. Gentleman now answer the question that was put to him earlier by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar)? Why should a person who is so rich that he lives in a large mansion set so well back from the road that his house is out of sight from the ordinary public pay only about two and a half times the amount paid by a council tenant? The right hon. Gentleman said that that was fair. Will he kindly explain why he thinks it is fair?

Mr. Lang: It is fair because what happened under the domestic rating system was unfair, when there was no protection for those in more valuable houses. A range of two and a half times between the highest and lowest bands is about right, given the rebate scheme which we shall be introducing and given the fact that we are talking about 11 per cent. of the cost of local government. A substantial proportion of the rest will come through indirect and direct taxation, to which the better-off in society will contribute much more than those on low incomes.

Mr. Norman Hogg: Will the Secretary of State pay tribute to those local government officers who, in council offices throughout the country, have tried to make the poll tax work and who will continue to have that job? Will he clarify the manpower implications to today's statement for local government and explain why he is encouraging the use of assessors from the private sector when there are skilled and professional people in local government well capable of discharging that task?

Mr. Lang: I pay tribute to the officials in local authorities that have administered the poll tax efficiently, as some of them have. As for the manpower implications of the change to the new arrangements, I cannot give the hon. Gentleman detailed figures now, but in the course of the consultation process a clearer picture may emerge.
The answer to the hon. Gentleman's question about valuation is that the Government took the view that the most effective way to get the new system up and running quickly and with the appropriate accuracy of valuation was to use Inland Revenue valuation officers, supervising the arrangements and employing, as appropriate, valuers from the private sector. It is in everybody's interest that we get the new system up and running as quickly as possible, and I believe that what I have described will achieve that.

Mr. Dick Douglas: Is the right hon. Gentleman aware that we in the SNP have extreme difficulty in accepting his figures, in view of the fact that it took him two months to respond to our statement about a local income tax? We shall wish to discuss the matter with him further. Is he further aware that the new scheme


smacks of a band-aid tax, with the whole thing stuck together to give a spurious view of coherence that it totally lacks? Those who are interested in decision-making and responsibility in local government read centralising forces into the right hon. Gentleman's statement.
If the right hon. Gentleman is really interested in getting the scheme up and running, why will he not, in view of the scarcity of Scottish legislation before the House, immediately introduce a Bill giving 100 per cent. rebates, so making it clear that students and others will not have to pay the tax and showing that local authorities in Scotland will not again have to go through the stupid exercise of trying to collect money from people who manifestly cannot pay?

Mr. Lang: The question of rebates in the remaining two years of poll tax is still under consideration. The hon. Gentleman says that the new tax lacks coherence. We have worked on the proposal carefully and gone into all the issues in great detail. I urge him to examine it more carefully, when he will find that, far from lacking coherence, it is an extremely coherent and effective system. I welcome the sign that I took from his remarks that he will take part in the consultation process. I shall look forward to his submissions once he has had an opportunity to study the detail of the matter.

Mr. Dennis Canavan: Will the Secretary of State now eat humble pie and admit that he has been forced into a U-turn in the face of the massive demonstration of people power, including a disciplined, conscientious campaign of civil disobedience to an extent not seen in Scotland for centuries? Will he admit that, if everybody had dutifully touched the forelock and stumped up every penny of poll tax on demand, the right hon. Gentleman would not have been forced into making his historic statement to the House today?

Mr. Lang: The main reason why we had to decide that the community charge was no longer viable was its failure to control high-spending local authorities. It was perfectly clear from some of the levels of poll tax that some local authorities sought to impose on their residents that the tax was no longer an acceptable method of funding local government. Far from carrying out a U-turn, we are going on both from the discredited domestic rating system and from the community charge, with its shortcomings, to a new system which is infinitely better than both.

Mr. John McAllion: Since 1989, the Secretary of State has personally and passionately defended the defining characteristics of the poll tax—the liability of everyone to pay something, the requirement for a poll tax register, the rejection of any sort of property tax. This afternoon he has been forced to eat his words. How can he with any honour hang on to his high office when his personal credibility has been so undermined by the retreat of his right hon. Friends in the Cabinet? Should not he and the other poll tax fanatics in the Scottish Office do the decent thing and resign?

Mr. Lang: This is the first local government finance system that I have helped to design. I believe that it is more effective than the community charge system or the domestic rating system. I believe that it meets the objectives that I set out in my statement on 21 March. Once the hon. Gentleman has considered it further, he will think so, too.

Mr. Jimmy Hood: Will the Secretary of State cast his mind back to the recent council elections when there were Tory party posters all over Scotland condemning what they called the roof tax? The Secretary of State and his right hon. Friends have today announced a seven-band roof tax for the United Kingdom and for Scotland.
Since we have a proposal today offering transitional benefits and payments to millionaires, why cannot we have immediately a one-clause Bill that will do away with the minimum contribution of 20 per cent.?

Mr. Lang: The roof tax was locked up so quickly when the Labour party realised how unpopular it was that it is difficult now to scrutinise its details. As far as I am aware, it had few of the features of our new council tax, which will limit the burden on householders in the top band to paying two and a half times what those in the bottom band will pay. The system includes a personal element in the form of the 25 per cent. discount for one-person households, and the new system avoids arbitrary revaluation leaps every few years. It will operate fairly and, unlike the roof tax, it will gain widespread acceptance.

Mr. Tom Clarke: Will the Secretary of State consult the Convention of Scottish Local Authorities to explain why England is to have a commission to consider structural changes but Scotland is not? Will he also meet representatives of the Keep Scotland Tidy campaign to consider the removal of the vultures from rooftops and advertising hoardings placed there by the hon. Member for Stirling (Mr. Forsyth) and now looking like chickens that have come home to roost?

Mr. Lang: Knowing the hon. Gentleman's history as a former president of COSLA, I can reassure him that I look forward to further consultations with that organisation on these proposals and to the opportunity to discuss the proposals that we announced on 21 March, following which I went to the COSLA annual general meeting the next day.
As for the vultures, they flew away from the rooftops as soon as the Labour party abandoned its roof tax proposals, recognising that that system was not viable. The hon. Gentleman can rest happy: there is no question of the vultures reappearing against the background of these extremely effective and efficient proposals.

Mr. James Wallace: In the past, the Secretary of State has said that local accountability is an important feature of a local tax. How does he see local accountability, operating in the islands areas, when his illustrative bilks show that there will be no local tax and when, regardless of the size of house in which they live, people will still have to pay 2·5 per cent. more in a national tax in an area in which the cost of living is already among the highest in the United Kingdom?

Mr. Lang: The hon. Gentleman always draws attention to the fact that the situation in the islands is different—as it is in this case. Spending in the islands is below assessed need—a lesson that I wish many other local authorities would learn. Our present grant distribution assumptions mean that there would be no council tax in those islands, but I think that the hon. Gentleman will recognise that that should be dealt with, in the interests of equity. We shall be willing to discuss the matter in the course of consultations to try to achieve a system that is fair.

Mr. Gordon McMaster: Is the right hon. Gentleman aware that his credibility is at an all-time low following his humiliating U-turn and the mess that he has created and announced today? Does he realise that there is an easy way to get some of that credibility back? It is to announce today that he will abolish the 20 per cent. rule, which affects so many pensioners and unemployed and disabled people, and that he will consider rebating them for the extra year that they have paid the poll tax.

Mr. Lang: I have no announcement of any sort to make about that. We are contemplating a new kind of tax and a new kind of arrangement for it. It is the Labour party which would lose credibility if ever it sought to implement its proposed return to unfair rates, not least because of the impact that that policy would have on the business community in Scotland, for which the Opposition propose to remove the harmonisation progress that we have achieved in the past few years—progress towards a uniform rate and the reduction of business rates all over Scotland. The Labour party's policy would allow local authorities to let rates rip, to the extreme detriment of business throughout Scotland.

Mr. William McKelvey: The Secretary of State must realise that the millionaire living alone, perhaps in Eastwood, might be content to wait until he receives his 25 per cent. rebate—lonely money. But there are many lonely, poor people who cannot afford to pay the poll tax and who never have been able to afford it and who have run up debts, thereby contributing much to the £600 million arrears faced by Strathclyde. What will he do to assist Strathclyde with its massive arrears bill and to help people caught in the poverty trap who cannot afford to wait until 1993 for an easing of their pain?

Mr. Lang: The hon. Gentleman is fully aware of the fact that under the community charge system rebates are paid up to 80 per cent., and that the remaining 20 per cent. for which people are liable is taken into account when calculating income support. The difficulty facing many people on income support is that many hon. Members in the Labour party, and in the Scottish National party until recently, encouraged non-payment. That created difficulties for local authorities such as Strathclyde and for people who took the advice proffered to them so irresponsibly; and the responsibility for those problems lies with many hon. Members in the Opposition parties.

Mr. Gavin Strang: Does not the Secretary of State see that, by insisting on retaining a link with the poll tax through the personal discount, he is building in some of the same problems as existed with the poll tax? The fact is that many people who live in two-person households will register elsewhere so that their households can get a discount, and they will be able to register with households containing two or more people without adding to those households' bills. The right hon. Gentleman must appreciate that the tax will be discredited from day one because of that possibility of evasion.

Mr. Lang: The hon. Gentleman has a mind which seems to seek out methods of evasion. It will be up to local authorities to ensure that there is no evasion; in any case, there will be little incentive for evasion, because this is a fair tax which will be well imposed at a reasonable level.

The discount is expressed as a proportion of the property element and is thus a progressive tax: the personal element will increase the higher the band.

Mrs. Ray Michie: Can the Secretary of State explain why a house with two people and only one income has to pay more than a house with only one person and one income?

Mr. Lang: If she looks at the figures, the hon. Lady will see, when she has had the chance to study them carefully, that the system is a fair one which takes account of the difference in the burden that falls on a house with two or more occupants and the burden that falls on a house with only one occupant. The 25 per cent. discount is a fair way of taking account of that difference, against the background of a rebate scheme.

Mr. Mike Watson: I should like some clarification from the Secretary of State. The consultation paper seems to reject the idea of capital values as a basis for assessment and speaks of bands expressed as a percentage of the average national property value. What is that average national property value? Will it be set at a United Kingdom level or a Scottish level? Is there a distinctive Scottish element to the proposal? If so, what form will it take?

Mr. Lang: Property bands will be based on values of properties within a Scottish context. Those valuations will be different from valuations in Wales and England. We are going for capital values because they are banded and their impact is thus dampened; the impact of the capital value of a house on what a person has to pay is modified. That is a more sensible, fairer and more realistic way of proceeding than reverting to the notional rental value basis used under the old domestic rating system.

Dr. John Reid: Does not the Government's ignominious retreat today show that they do not even know how to retreat in good order? Have they not forgotten the first law of Healey—when in a hole, stop digging—and staggered from one tax which was unfair and unjust to another which is unfair, unjust and complicated, with this band, that band and the next band? Every day will be 12 July for the next few years in local government. Why are we discussing today how to raise tax for local government, in what form it will be raised, how it will be capped and how it will be spent when it has not yet been decided when to issue the consultation paper on what form local government in Scotland will take?

Mr. Lang: I made it clear to the hon. Gentleman that our first consultation paper on the structure of local government will be issued in a few weeks' time and it is not necessary or desirable to rush that process either in the preparation of the document or in the consultation period that will follow. We intend to consult widely on the structure of local government because we intend to get it right. We have considered carefully the system for the funding of local government and once the hon. Gentleman has become more familiar with it, he will realise that it is not nearly so complicated as he thinks it is at first glance and that it will work effectively.

Mrs. Margaret Ewing: The Secretary of State has referred to possible changes in water charges, which will be of particular interest to fish and food processors in the Grampian region who pay the highest water rates in


the United Kingdom. What steps will he be taking to ensure that the industrial voice is heard in the consultations, and does he expect that the charges in water and sewerage charges will be implemented at the same time as the council tax?

Mr. Yeo: The proposals on which we are consulting concern personal water and sewerage charges. In the past, sewerage charges have been absorbed within the community charge system, whereas water charges were separately billed as a community water charge. Therefore, we have to take account of the need to reform that as well as reforming the community charge. We shall consult on that and the hon. Lady will have every opportunity to study the paper, and, if she wishes, to submit her views.

Mr. Tam Dalyell (Llinlithgow): In the consultation paper, will there be an appendix or a specific explanation of those points where Ministers now think that the Wheatley report was wrong? Will there be a full explanation of the amount of compensation that will have to be paid to officials in Strathclyde, Lothian and elsewhere if there are to be changes?

Mr. Lang: I will obviously consider the hon. Gentleman's suggestions. We have not yet written the consultation paper, but we will bear in mind his suggestion that we should make reference to the Wheatley commission, possibly in an appendix or in the body of the paper. With regard to compensation, it is certainly part of our purpose to ensure that any change to any new system of local government structure in Scotland should achieve that changeover with a minimum of expense, disorganisation and disruption, learning the lessons that we should all learn from what happened last time.

Mr. Alistair Darling: Is the Secretary of State aware that a couple in modest circumstances owning a small house in Gorgie in Edinburgh will find their house in the same tax band as a large three or four-bedroomed house in rural Scotland owned by a single person who may well receive the 25 per cent. rebate? Where is the link with ability to pay, and why should most houses in Edinburgh find themselves in the top three bands in the new tax system?

Mr. Lang: The problem that Edinburgh faces is that it has a high-spending district council. The solution to the problems that are faced in Edinburgh lies in the hands of the local authorities, both district and regional.

Mr. Menzies Campbell: The Secretary of State knows that there is more than one way in which to arrive at the capital value of a property. What principles of valuation will be used by the Inland Revenue in deciding into what band particular houses should fall? If a householder embarks on improvements such as installing double glazing, central heating or a new bathroom, will that take the house from one band into another, thereby incurring additional cost?

Mr. Lang: The precise details of the basis of valuation will obviously be part of the consultation process, but essentially it will be the market value that arouses the interest of the valuation office. It is most unlikely that in the vast majority of cases changes such as the installation of central heating which the hon. and learned Gentleman mentioned would lead to a change of valuation banding. Only a substantial change in the nature of a house would

lead to an upgrading from one band to another. But even if there were such an upgrading, the relative movement in terms of the extra burden of local government tax would be small because of the existence of seven bands and the gradation which exists within them.

Mr. George Foulkes: As we know from the statement made by the Secretary of State for the Environment that he believes that a commission is necessary to carry out the review of local government in England, and as on the last occasion that there was a major review of local government in Scotland it was carried out by the Wheatley commission, how can the Secretary of State honestly believe that a review of local government can be carried out systematically and, above all, fairly without an independent commission in Scotland? Will it not be yet another political gerrymander by the Secretary of State?

Mr. Lang: No, there will be no question of any Conservative Member contemplating gerrymandering of any kind. The very existence of the Wheatley commission and the work done by it gathered together a large amount of information that will prove a useful quarry as we review the reform of local government. The local government commission contemplated by my right hon. Friend the Secretary of State for the Environment will be an advisory body and my right hon. Friend made it clear that the Government would decide what changes to make and what form they would take.
It is proposed that the local government commission will replace the local government boundary commission in England and undertake its work on a long-term, gradual, area-by-area basis, taking account of the wide diversity of local government structures in England. In Scotland, we have a much greater cohesiveness and coherence in the system and I believe that it will be possible, without haste and without lack of consultation, to move to a single tier process that will win general acceptance.

Mr. Ron Brown: The Secretary of State has admitted little today, but he has admitted that the poll tax has been a mistake. Why should the low-paid in Scotland pay for the Government's mistake? Why should working-class people pay for their mistake? Surely there should be an amnesty. Even Charlie Gray, the leader of Strathclyde regional council, has argued for that. Mr. Gray is not a left—winger I understand that he is a moderate—so surely his views should be taken into consideration. I understand that they reflect the general consensus within COSLA. Will the Government listen to reason in Scotland? Clearly, many feel that the only alternative to the Government is a Scottish Parliament with proper economic and political powers so that the Scottish people can run their own affairs.

Mr. Lang: I always listen with great care to anything said by the leader of Strathclyde council, although it is intriguing to find him forming an axis with the hon. Gentleman. Whether that is a reflection of the way in which the Labour party is going, I do not know. Suffice it to say that I am sure that the hon. Gentleman, like everyone else in Scotland, will, once he has digested the proposals, find them a good, sound and secure way forward for local Government funding.

Mr. John Maxton: Does the Secretary of State not understand that the people of


Scotland, who have suffered under the poll tax and seen their local government dive into crisis as a result of it, expected today to see some sense of shame and regret that the tax had been imposed on them by the right hon. Gentleman who, as a Minister, served on the Standing Committee that considered the Bill which introduced it?
After the humiliating climbdown that we have seen, the people of Scotland expected to see the Secretary of State and his Ministers announce their resignations today. Why is he allowing the crisis that is now facing local government in Scotland and the poverty that is facing so many people there to continue for at least another two years instead of, with our support, introducing legislation that would bring back the rating system on 1 April 1992, abolish the 20 per cent. minimum payment, backdate rebates and get rid of the poll tax once and for all and do it efficiently and quickly.

Mr. Lang: Far from regret, I feel a sense of pride that we have achieved a new system of funding local government which is infinitely better than the domestic rating system of the community charge. My involvement in the Committee to which the hon. Gentleman referred was, as he recalled, primarily concerned with the standard community charge and the introduction of the new arrangements for business rates. I believe that what we have done for business rates in Scotland is widely welcomed and will be greatly to the advantage of the Scottish economy. It is clear that, at the next general election, the Scottish electorate will have a choice between our new, simple, easy-to-collect and fair council tax, or returning to the old rating system under Labour. I have no doubt which they will choose.

STATUTORY INSTRUMENTS &c.

Ordered,
That the draft Representation of the People (Scotland) Amendment Regulations 1991 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Boswell]

Garden Supplies(Sunday Trading)

Mrs. Marion Roe: I beg to move,
That leave be given to bring in a Bill to amend the Fifth Schedule to the Shops Act 1950 to make lawful the sale of garden supplies on Sundays.
As the House may know, I am not only chairman of the Conservative parliamentary horticultural committee and the parliamentary consultant to the Horticultural Trades Association, as is shown in the Register of Members' Interests, but I have a large number of garden centres in my constituency. I am therefore delighted to have the opportunity to introduce this Bill, which has the aim of making one small improvement to the way in which Sunday trading laws operate.
It forms no part of my purpose to rehearse the arguments for and against wholesale reform of the Shops Act 1950. Those arguments have been made on several occasions over the past decade or so—most recently, last month, when my hon. Friend the Member for Hendon, South (Mr. Marshall) introduced new proposals relating to the vexed issue of Sunday trading. I am delighted to reassure right hon. and hon. Members that I have no intention of embarking on a discussion of the complex arguments involved in the wider debate on Sunday trading. That would be far too major and wide-ranging a debate for an occasion such as this.
The measure that I propose should be seen for what it is: a tiny change that is designed to reflect contemporary reality. My Bill has little bearing on the wider debate about the future of the 1950 Act, which will have to wait for some time yet. The Bill suggests that garden supplies should be added to the list of exemptions that are contained in schedule 5 to the Shops Act 1950, to make lawful the sale of garden supplies on Sunday. The Bill would set no precedents, nor would it trigger any controversy over Sunday trading laws, and it could be implemented immediately. It is not the thin end of the wedge.
Throughout the ages, part of the strength and richness of our national life has stemmed from the special status that Sunday holds. The best safeguard of that status is not to be found in legislation, but in good sense and contemporary custom. People, not laws, make Sunday special.
Part of the pleasure of Sunday is that it is a time to reflect, worship, rest, and enjoy oneself. One way that millions of British people enjoy themselves on Sunday is by gardening. It is something of a national obsession. Napoleon called us a nation of shopkeepers, but today we are a nation of gardeners. It strikes me as perverse that one of this nation's most innocuous creative hobbies, which is enjoyed by countless millions on one day more than any other in the week, should be hampered by the exclusion of garden supplies from the list of goods that shops are allowed to sell on Sunday.
In an age in which the law allows people to relax and enjoy themselves in countless other ways on Sunday—by attending any number of sports events, visiting the park or local cinema, or walking around a stately home or castle—it is peculiar in the extreme that the law hampers us from indulging in that most British of pastimes—gardening.
Every time the Sunday trading issue is raised, the House has great fun comparing and contrasting the anomalies that exist in current legislation. Under current law, selling


plants, flowers and vegetables is legal, but selling trowels, spades, hoes, and pots is not. Who would have thought that it would be illegal to sell a common or garden watering can on Sunday?
Sunday is the busiest day of the week for garden centres, when as much as 40 per cent. of their weekly turnover is achieved. Around 2,000 centres open each Sunday, and many depend on Sunday sales for their very existence. Only a handful stay closed. People want to garden on Sunday, and to buy the supplies that they need on that day too. As the majority of garden centres open on Sunday anyway, my Bill would not mean more Sunday openings; it would just mean more legal Sunday openings.
I say to those who argue that legalising the Sunday trading of garden supplies would adversely affect the work force by taking away their one day of rest, that most garden centres encounter no difficulty in recruiting weekend staff, even for Sundays. Many people are happy to work that day in exchange for another day off during the week. In that way, they can earn overtime pay on Sunday, as well as have another day off in the week free to run errands or to shop themselves on a day when stores are far less crowded than they are on Saturdays.
No one goes to work in a garden centre in the expectation that it will close on Sunday. That would be like going to work in a national museum on the assumption that it will close on Sunday—the very day that most of the public actually have a chance to visit it.
People do not complain about the Sunday opening of garden centres. In fact, it is generally assumed that they are legally open that day—which is not surprising, given that public demand has led to garden centres opening on Sunday. For many, a Sunday afternoon visit to a garden centre is a family outing. There is no outcry over the lack of law enforcement in closing garden centres on Sunday. In fact, enforcement of the law in that regard is notoriously patchy and unfair. Some local councils turn a blind eye to Sunday trading; some enforce it here and there, and others actively encourage it.
Schedule 5 to the Shops Act 1950 identified goods and services that were then needed on Sundays in the ordinary course of life. I am sure that schedule was not meant to be cast in stone, never to be changed. I imagine that, had

garden centres existed in 1950, the wording "fruit, flowers and vegetables" that schedule 5 currently contains would have read, "garden supplies, flowers, fruit and vegetables."
Forty years ago, it was recognised that the list of exemptions would need to change, to keep with the times. The fact that thousands of garden centres, employing thousands of people, open on Sundays is testimony to the need for change. To the best of my knowledge, no organised group opposes trading by garden centres on Sunday.
The Bill makes a modest addition to the list of goods that can be sold in shops on Sunday, and will relieve many people who run garden centres of the fear of prosecution. It will ensure that Britain's gardeners have a chance to buy the supplies that they need, when they want them. The Bill will not alter Sunday's special status. I venture to suggest that it will probably enhance it, and, crucially, will not impinge on the rights of those who work in Britain's garden centres. I hope that right hon. and hon. Members will give the Bill their support.

Question put and agreed to.

Bill ordered to be brought in by Mrs. Marion Roe, Mrs. Rosie Barnes, Mr. Roland Boyes, Mr. Patrick Cormack, Dame Peggy Fenner, Mr. Simon Hughes, Mr. Allen McKay, Mr. Austin Mitchell, Mr. Cecil Parkinson and Mr. Timothy Raison.

GARDEN SUPPLIES (SUNDAY TRADING)

Mrs. Marion Roe accordingly presented a Bill to amend the Fifth Schedule to the Shops Act 1950 to make lawful the sale of garden supplies on Sundays: And the same was read the First time; and ordered to be read a Second time upon Friday 3 May and to be printed. [Bill 140.]

Sir Nicholas Fairbairn: On a point of order, Mr. Deputy Speaker. My hon. Friend the Member for Broxbourne (Mrs. Roe), whom I thoroughly support in this matter, referred to Britain's gardeners. May I remind her that section 5 of the Shops Act 1950 has never applied to Scotland, which is a Calvinist country? We have never had any difficulty. We garden on Sundays, and we welcome it. After all, religion started in the Garden of Eden, and I think that she should copy the example of Scotland.

Orders of the Day — Ports Bill

As amended (in the Standing Committee), considered.

New clause 2

FINANCIAL ASSISTANCE FOR PROPOSALS TO MAXIMISE EMPLOYEE PARTICIPATION IN EQUITY OF SUCCESSOR COMPANIES

' .—(1) The power under subsection (2) below—

(a) is exercisable by a body which is a relevant port authority in any case where that body proposes to form or has formed a company in pursuance of section 1 above; and
(b) is exercisable by a body which was such an authority immediately before the transfer under section 2 above to a company formed by that body of its property, rights, liabilities and functions;

and references below in this section, in relation to any such body, to the relevant company are references to the company it proposes to form or has formed (as the case may require).

(2) The body concerned may on such terms as it thinks fit agree with any persons who at the time of the agreement qualify for assistance from it under this section—

(a) to indemnify those persons in respect of the whole or any part of any expenditure to which subsection (4) below applies; or
(b) to discharge on their behalf the whole or any part of any liability to which that subsection applies.

(3) For the purposes of subsection (2) above persons qualify for assistance under this section from any body if—

(a) each of them satisfies the employment condition as regards assistance from that body;
(b) they have formulated a proposal for maximising participation by employees of the relevant company in ownership of its equity share capital; and
(c)they appear to the body concerned to be best placed to secure the implementation of such a proposal.

(4) This subsection applies to any expenditure or liability of the persons concerned incurred wholly and exclusively for the purposes of the proposal mentioned in subsection (3)(b) above.

(5) A person satisfies the employment condition as regards assistance under this section from any body—

(a) so long as it is a relevant port authority, if he is employed by it; and
(b) after it has ceased to be such an authority, if he is employed by the relevant company.'.—[Mr. McLoughlin.]

Brought up, and read the First time.

The Parliamentary Under-Secretary of State for Transport (Mr. Patrick McLoughlin): I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Sir Paul Dean): With this, it will be convenient to consider the following: Government new clause 3—Financial assistance for proposal to maximise employee participation in equity of the company.

New Clause 12

FINANCIAL ASSISTANCE FOR EMPLOYEE SHARE OWNERSHIP SCHEMES

'(1) Before inviting bids for their holding any relevant port authority under Part I or Part I of this Act shall give employees (including management) of the successor company the opportunity to put together a bid to purchase the holding, and the authority shall accept such a bid without inviting competing bids providing the following conditions are met:—

(a) the amount of the bid represents at least the market value of the authority's holding in the successor company, such market value to be certified by independent professional advisers acceptable to the appropriate Minister; and
(b) the structure of the bid must incorporate a substantial element of employee shareholding, ("substantial" in this context meaning that at least 25 per cent of the ordinary voting capital of the acquiring company should be held by, or on behalf of, employees, in addition to those held by directors and senior managers of the acquiring company).

(2) Financial assistance shall be available in respect of bids put together substantially by management and employees of the successor company and incorporating a substantial element of employee shareholding in order that those involved in preparing such bids are able to obtain the appropriate level of professional advice. Subject to the overriding discretion of the appropriate Minister, 75 per cent of fees and costs (including value-added tax) incurred for this purpose may be reimbursed out of moneys voted by Parliament up to a maximum amount (on which the 75 per cent reimbursement will be based) of £80,000.'.

Government amendments Nos. 5 to 7.

Amendment No. 53, in clause 8, page 6, line 12, at end insert—
'(6A) Without prejudice to the generality of subsection (6) above, in deciding whether or not to confirm the scheme, the Minister shall have regard to the implications of the scheme for those currently employed by the relevant port authority and for their pension and employment rights, and to any proposals in the scheme designed to promote employee participation in the company.'.

Amendment No. 57, in clause 12, page 9, line 36, after '(2)', insert
'Except as provided for in subsection (2A) below,'.

Amendment No. 50, in page 9, line 37, at end insert—
'(2A) Levy shall be charged at one half of the rate stipulated in subsection (2) above, in circumstances where at least fifty per cent. or more of all the securities disposed of are transferred to employees of the relevant port authority or to a trust fund created or operating for the benefit of the said employees, except that where, within five years of the original disposal of securities, as a result of subsequent transfers inter vivos of the securities, more than fifty per cent. of the securities are held by persons other than the said employees, or trust fund, the company shall be charged a further levy of one half of the rate stipulated in subsection (2) above.'.

Amendment No. 61, in page 9, line 37, at end insert—
'(2A) In the case where the successful bidder for the authority's holding in the successor company incorporates a substantial shareholding by, or on behalf of, employees or former employees or their dependants of the successor company and its subsidiaries ("substantial" in this context meaning that at least 25 per cent. of the ordinary voting capital of the acquiring company should be held by such employees, in addition to those shares held by directors and senior managers of the acquiring company) the levy shall be charged at the rate of 50 per cent. on the consideration given for the securities disposed of.
(2B) In the event that the percentage of the ordinary voting capital of the acquiring company held by or on behalf of such


employees falls below 25 per cent. within five years of the date of the initial transfer of securities in the successor company, the Secretary of State may require the payment by the chargeable company of an additional levy, which levy may be an amount up to 20 per cent. of the consideration given for the securities at the time of their initial transfer (or, if lower, up to 20 per cent. of the market value of the securities at the time the employee holding falls below 25 per cent.).'.

Government amendments Nos. 9 and 10, 15 to 17 and 22 and 23.

Mr. McLoughlin: First, may I draw the attention of the House to new clause 2, tabled in the name of my right hon. and learned Friend the Secretary of State. These amendments fulfil a commitment that I made to my hon. Friend the Member for Ipswich (Mr. Irvine) when I accepted in principle an amendment that he proposed in Committee to enable port authorities to repay the costs incurred by their management and employees in buying or attempting to buy the authority's successor company. The main amendment is new clause 2, which substantively gives effect to my hon. Friend's proposal. Perhaps inevitably, there are a number of changes in the drafting, but I hope that my hon. Friend will accept that the Government's amendment goes at least as far as—and in some respects possibly further than—his proposal did in providing practical assistance for management-employee buy-outs when ports come to privatise themselves under the new legislation.
I will mention briefly the other amendments grouped with new clause 2.
New clause 3 makes equivalent provision to new clause 2 for the Port of London Authority and the new Tilbury company. Amendments Nos. 5 and 6 are consequential to new clause 2. If a port authority has incurred liabilities by giving financial assistance to a management-employee buy-out team before transferring its undertaking to its successor company, those liabilities of course need to be excluded from the transfer, and remain with the former port authority. Amendments Nos. 10, 16 and 17 are drafting amendments consequential to new clause 3, in particular of the need to relate the definition of "the port of Tilbury" to that clause.
Amendments Nos. 22 and 23 define what is meant by the terms "equity share capital" and "maximising participation by employees of the company in ownership of its equity share capital", which are used in new clauses 2 and 3.
Amendment No. 9 enables an authority to offest against the proceeds of disposal on which levy is payable any costs that it may incur as a result of meeting the expenses of a bid mounted by its management and employees, whether or not that bid is ultimately successful.
An amendment along those lines was proposed in Committee by my hon. Friend the Member for Ipswich when he made his important proposal, now reflected in the new clause 2. that the authority should be able to reimburse the expenses of a management and employee buy-out team.
The point that my hon. Friend the Member for Ipswich made in tabling his amendment in Committee was valid. Obviously, if an authority is to pay these expenses, they must be clear at the outset how the cost is ultimately to be met, given that their own assets and liabilities will in due course be transferred to the successor company after disposal. One possibility would be to let the new owner of the successor company eventually pick up the liability. But

that approach would mean that, if an outside bidder purchased the company, he would then be saddled with meeting the expenses of a rival bid that had failed, a result which could hardly be justified.
Accordingly the Government accept that these expenses, like those that the authority incurs directly in organising the disposal, should be allowable as a deduction against the amount liable to levy.
Amendments Nos. 7 and 15 further underline the Government's commitment to the encouragement of management-employee buy-outs. Amendment No. 7 fulfils a commitment that I made in Committee to my hon. Friend the Member for Faversham (Mr. Moate), when I accepted in principle an amendment that he had tabled. I undertook to table an amendment which would reflect my hon. Friend's views, as expressed in his own amendment, and he will see that the amendment now before the House is very close to what he proposed.
I hope that my hon. Friend will agree that this embodiment in the legislation of the Government's wish to encourage management-employee buy-outs is a useful addition to the Bill.
Amendment No. 15 makes similar provision to amendment No. 7 about the exercise of my right hon. and learned Friend the Secretary of State's powers concerning the disposal of the port of Tilbury by the Port of London Authority.

Ms. Joan Walley: I am sorry that we are so late in commencing our discussion of the Bill. I have a feeling that if the Bill is passed without our amendments it will be as expensive a mistake as the poll tax, which was the cause of the delay that kept us from further consideration of this Bill.
The Minister says that the new clause is all about money. The amendments in this group deal with employee share ownership bids, to some extent with the port of Tilbury and with various aspects of pensions. The point is that they are all concerned with money. The question is whether the commitment given by the Minister in Committee allows him to give an assurance to the House that proposals on employee share ownership plans and other forms of management and employee share ownership will be able to go ahead, or whether trust ports forced into privatisation and seeing ESOP schemes as perhaps the best way out will be so unfairly disadvantaged that they will not be able to achieve the ESOP scheme that they want.
6.15 pm
We remain fundamentally opposed to the privatisation of trust ports and to the sale of the municipal ports. We had hoped that a general election might intervene early enough to prevent this measure from going through—it still could. If the legislation goes ahead, an employee-management buy-out could give the local work force some hope of being able to continue to play a vital part in the local economy.
The amendments that we have tabled provide for a series of changes in the legislation that will promote share ownership schemes in the event that this unwelcome legislation is passed.
New clause 12 allows the authority to accept a bid from employees and managers "without inviting competing bids" provided that certain safeguards are met. Therefore, we are not saying that the ports should be


given away per se, but that there could be safeguards and we have given an illustration of what they could be. The safeguards relate to the market value being independently certified and to the bid incorporating a substantial element of employee shareholding—at least 25 per cent. I cannot over-emphasise the importance of the fact that those making such bids should have access to financial assistance. For that reason our new clause provides for the reimbursement of £80,000.
Amendment No. 61 states:
the levy shall be charged at the rate of 50 per cent. on the consideration given for the securities disposed of.
We have to consider the Government's proposals in detail as well as the other amendments that have been tabled in this group, because we want the best possible scheme to be written into the Bill.
I am not sure what the Government proposals mean. I am not clear how much further they take us down the route to employee and management share ownership. Amendment No. 7 states:
The appropriate Minister shall have particular regard to the desirability of encouraging the disposal to managers or other persons employed by the successor company of the whole or a substantial part of its equity share capital.
Unlike the Minister's proposals, ours show in detail how that could be done. For those reasons, we press the House to accept the direct and detailed proposals that we have made. We feel that the Government have not included the detail that we would like.
In Committee, the Minister said that too much preferential treatment would destroy competition and that there was a danger that, if there were no competition, no other bids would be put alongside the ESOPS. He said that share ownership schemes might result in delays in the trust ports paying off their debts to the Government. The Government must address the whole issue of competition. They must tell us where they stand with regard to the question of employee and management share ownership. Does the concept have their support in principle only? Will the Minister say whether the terms of the amendments could be made more detailed, perhaps in another place?
In Committee, I said that should privatisation go ahead there would be some support among the Tilbury work force for such schemes. I expressed serious concern about the possibility of the Tilbury management's taking a naive view. The position might not be as easy as the management thought. I said that it was more likely that a large predator company would come along and would then want to sell everything off.
I should like to draw to the attention of the House press reports suggesting that Hong Kong International Terminals has expressed great interest in buying out the port of Tilbury. Given all the Minister's assurances with regard to management and employee share ownership—and to Opposition Members, employee share ownership is important—I hope that the Minister will be able to tell the House how the arrangements will fit in with his amendments. How are they affected by the information that there will almost certainly be bids such as the one from Hong Kong International Terminals?
The Minister may say that if there were no competition, the Tilbury employees would be worried about the danger of buying something that might not be a going concern in the future. If privatisation is to go ahead, this kind of share ownership could be the best of a bad job. These amendments do not provide employees or management with the assurances that they sought.
The issue of pensions is included in this group of amendments. The Minister looks puzzled. Does he intend to refer to this matter at a later stage? The amendments on employee share ownership plans are related to those that concern the pensions of the Tilbury work force. I reiterate the Opposition's view. Given all the problems that have arisen from previous privatisations, and all the real fears of employees, when public utilities have been sold off, about their pensions being kept on the same basis, will the Minister avoid simply repeating the assurance that he gave earlier? Can he tell us that he has found a way round the problem whereby about 400 employees of the Port of London Authority will be worse off as a result of these proposals?
It is important, in this context, to emphasise that the pension fund of Port of London Authority employees is so healthy that those people could have index-linked pensions in the not too distant future. Clearly, that is a benefit that employees transferred to the port of Tilbury would not enjoy. I hope that the Minister will be able to reassure the House on this point.
Finally, there is the issue of the Port of London Act 1968. Members of the Standing Committee had difficulty determining exactly what constitutes the port of London, and what constitutes the port of Tilbury, for the purposes of deciding which port owns what. The 1968 Act is now out of print, and we still do not have a clear definition. Is the perimeter fence at Tilbury the determining factor? Can the Minister assure us that what belongs to Tilbury will stay with Tilbury and that large tracts of land will not be transferred?

Mr. Richard Holt: I did not wish to interrupt the hon. Lady just after she started her speech, but I am grateful to her for giving way now. She referred to the future. Can she tell the House whether the Labour party is committed to renationalising trust ports?

Ms. Walley: I repeat my party's assurance that it intends to implement an integrated transport policy, in which ports will play a most important role. We shall set up the advisory bodies that are necessary to secure investment in a national infrastructure. Our policies are laid out clearly in the party's documents. The hon. Gentleman seems to be uncertain as to the status of trust ports. I do not know whether I should be in order if I were to give him a history lesson. These ports have been held in trust by authorities. I think that I have dealt more than adequately with the hon. Gentleman's question.

Mr. Holt: rose——

Ms. Walley: I shall not give way again. I want to get on with this important group of amendments relating to management and employee share ownership schemes.

Mr. Holt: It is a debate.

Ms. Walley: Yes, it is a debate.
We should seek ways of making sure that the Bill will result in the introduction of the best possible share ownership schemes. The amendments that we have tabled give more than a general commitment to such schemes. We spell out how they could be introduced and implemented. To that end, we have consulted those who are in the best position to give advice.

Mr. Nigel Spearing: I shall leave aside the future, as we are debating this Bill. The query of the


hon. Member for Langbaurgh (Mr. Holt) was inappropriate. My hon. Friend referred to the fact that the definition of the port of Tilbury was debated in Committee. She may have noted that amendment No. 65, which is in my name and has been selected for debate, refers to the cartilage of the port of Tilbury. Is it not a fact that certain installations at Tilbury have an accepted geographical boundary? Is not the boundary indicated in some map, or set out in the Bill?

Ms. Walley: I am grateful to my hon. Friend for bringing that matter to the attention of the House. He has echoed a discussion that we had in Committee, when it seemed that we should be referring the matter to the Monopolies and Mergers Commission. It seems impossible to determine which part of the port of London belongs to the Port of London Authority, and which part belongs to Tilbury. We pressed the Minister about the issue. Members of the Committee had a copy of the very glossy brochure issued by the port of Tilbury, in which red and green squares indicate the various operational parts of the port. I hope that the Minister will be able to give the House a full audit of the land available at the port of Tilbury, and will make absolutely clear, before any sale, what exactly is being sold.
In Committee, it was said that discussion of this matter was premature, and that we should wait until the whole mechanism was set in motion. What we need is a full audit of the land. I hope that the Minister will be able to give us more detail about which land belongs to whom. As I said, the 1968 Act is out of print. I found it almost impossible to get a copy. It would help if the Minister defined the land that belongs to each port and say why there cannot be a full audit of that land.

Mr. Spearing: Bills usually contain definition clauses. At the end of this Bill I see that there is a clause with the rubric "Interpretation". Is my hon. Friend telling the House that in Committee the Government were unable to present either a map or a draft deed defining the boundaries of this possible future port—I say "possible", as the Bill has not yet been passed. If one purchases a house there is, at the very least, a boundary map. How on earth can the House of Commons consider the future sale of a port whose boundaries have not been defined? If my hon. Friend does not know the answer to that question, will she invite the Minister to intervene and tell us?

Ms. Walley: I share my hon. Friend's concern. He has expressed it much better than I could have. In Committee, the Minister for Shipping was unable to say what land belonged to the port of London, what land belonged to the port of Tilbury and which part of it would be sold off. We pressed the Minister for the details, but he did not provide us with a significant answer. We have had to wait until now, presumably because of the pressure that we have exerted, for the Minister to define the port of Tilbury as that which is defined in the references to be found in the Port of London Act 1968. The Minister does not appear to be willing to deal with that question now. Perhaps he intends to deal with it later.

Mr. McLoughlin: I should point out to the hon. Lady that, as the hon. Member for Newham, South (Mr. Spearing) has tabled amendment No. 65, that would be the most appropriate place to deal with the matter.

Mr. Spearing: On a point of order, Mr. Deputy Speaker. My intervention, in the form of a question to my hon. Friend the Member for Stoke-on-Trent, North (Ms. Walley), related specifically to my amendment, which Mr. Speaker has kindly selected. However, in the debate on this clause, we have discussed the port of Tilbury. It runs as a theme throughout the Bill. Is it in order for the House to consider a Bill that would permit the Secretary of State to sell part of a publicly owned property—the port of London—without the part that is proposed to be sold having been defined? I know that you cannot answer that question immediately, but there are some hours yet before Third Reading. Therefore, I draw it to your attention.

Mr. Deputy Speaker: I understand the hon. Gentleman's point. I am sure that he will take into account the fact that the Minister said that he believed that it would be more convenient to deal with the matter when we reach amendment No. 65, which has been selected for debate.

Ms. Walley: The Government are attempting to sell off something that they do not own; furthermore, they do not even know who owns it. That is extraordinary. It emphasises the terrible way in which this privatisation is taking place—presumably because the Treasury want to get their hands on the money. When the amendment tabled by my hon. Friend the Member for Newham, South (Mr. Spearing) is debated, I shall seek guidance from you, Mr. Deputy Speaker, on whether it would be in order for the sale of this part of the land to proceed without that information having been provided.
Ports that are against privatisation have expressed great interest in employee-management share ownership schemes. I cannot express too strongly the keen disappointment that is felt within the ports following the Government's insistence on going ahead with auctioning off the trust ports, by means of sale by tender. Many ports would have preferred an unlisted quotation and the opportunity to explore with the managers of local authority pension funds and their customers ways in which to make a bid. It was agreed to go forward on that basis in the case of Tees and Hartlepool Port Authority Bill, which was so severely damaged in the other place that its future is being considered in this Bill.
Whatever the Government say, the simple fact remains that the sky is the limit. They will not tell the House what positive action they intend to take so that these schemes can go ahead. Unless our amendments attract support and unless we can persuade the Government to go down this road, it will be impossible, whatever they may say, to establish employee-management share ownership schemes.

Mr. Michael Irvine: On Second Reading, my right hon. and learned Friend the Secretary of State for Transport said that he was considering how best to encourage management-employee buy-outs. New clauses 2 and 3 and the related amendments make it clear that his considerations have been fruitful. Management-employee buy-outs faced a major difficulty arising from the provision for competitive bidding. It was quite clear that to set up a competitive management-employee buy-out would be complicated, requiring specialist legal and financial advice and a range of valuations of property and equipment.
It was suggested that, in the case of an average port, the cost could amount to about £250,000 and that, in the case


of larger ports it could amount to considerably more. That would have been a very real deterrent to a management-employee buy-out bid. As the Bill was drafted, in the event of the bid failing, managers and employers would have been at risk of having to find the money to meet those costs themselves.
The problem does not apply just to this privatisation or to privatisations generally; it applies also in commerce when companies wish to sell off part of their operations by means of a management-employee buy-out. In the commercial world the problem is usually overcome by the vendor agreeing to underwrite the cost of legal and financial advice and the necessary valuations.
Specific statutory authority is needed to permit such underwriting in this case. It is interesting to note that there are precedents for such assistance to other management-employee buy-outs of state industries, or parts of them. In Committee, I made the point that such assistance was afforded when the National Bus Company was privatised. My hon. Friend the Member for Gosport (Mr. Viggers) gave a better example—the important privatisation of Harland and Wolff. A clause similar to new clause 2 was introduced to facilitate that management-employee buy-out, with very good results.
In Committee, I sought to move an amendment to deal with the difficulty. I acknowledged that my amendment was imperfect and I withdrew it when the Minister accepted that its provisions contained force. I am glad to see the new clauses and amendments, which put the matter far better and far more effectively than my amendment did.
I know that there is a great deal of interest in a management-employee buy-out in my constituency port of Ipswich, not only among the managers, but among all who work in the dock. I suspect that that is the experience of many of my hon. Friends and Opposition Members. It is significant that the hon. Member for Stoke-on-Trent, North (Ms. Walley) got herself into a contortion when she explained how she was basically opposed to this privatisation yet she was in favour of management-employee buy-outs. I am grateful to my hon. Friend the Minister for the new clauses and amendments.

Mr. John Prescott (Kingston-upon-Hull, East): The hon. Gentleman did not quite understand the intent of what my comrade the Member for Stoke-on-Trent (Ms. Walley) said. [HON. MEMBERS: "Comrade?"] It is a good and useful description. The Tory twits come out with silly nonsense.
When debating the Bill, we have to deal with matters in the order in which they appear in the Bill. The Bill is basically intended as a privatisation measure and we are against the privatisation of the trust ports. The difficulty associated with the trust ports—that of getting access to develop their assets—can be dealt with by a harbour revision order. We explained that on Second Reading and in Committee. We should prefer such an order. In the course of this debate, we must keep within the context of the Bill.
The Government have claimed that they want an ESOP arrangement. Given that, we have tried to make the point that if they wish to do that, heavy costs are involved. In that sense, we have an agreement. We may not have an agreement on what we do with the trust funds and on how

we might deal with the ports. In the context of the Bill, it is right for my hon. Friend the Member for Stoke-on-Trent, North to make her point.

Mr. Irvine: The problem facing the hon. Member for Kingston upon Hull, East (Mr. Prescott) and his hon. Friend the Member for Stoke-on-Trent, North is that, from an ideological viewpoint, they do not like privatisation, but they know very well that, among the dockers, the idea of a management-employee buy-out has a lot of support. It has a lot of support in Ipswich, and I believe that it has a lot of support in other ports. I welcome the new clauses and the related amendments, which clear the way for such management-employee buy-outs.

Mr. James Wallace: The fact that the Government have tabled amendments to promote employee participation in management-employee buyouts, that the Labour party has tabled similar amendments and that I have tabled amendments towards that end shows a remarkable consensus that management-employee buy-outs tend to be a good thing. We should therefore examine in some detail, if not at great length, the extent to which the new clause tries to promote an objective that is shared by hon. Members of all parties.
It is fair to say that there will be some cases in which the number of employees is not sufficient for such a buy-out. However, one would have hoped to find other provisions in the Bill which would seek to promote some employee participation, even if it does not amount to a buy-out.
The hon. Member for Ipswich (Mr. Irvine) was perfectly right to point out the number of additional expenses, especially the expensive buying in of professional expertise, which will be necessary to allow management and employees to put together a package. Undoubtedly, the new clauses and supporting amendments go a considerable way towards helping to promote management-employee buy-outs by taking that cost off the shoulders of those seeking to put together a package, if the trust port or company wishes such a package to go ahead. I note that the new clause says that the trust port
may on such terms as it thinks fit agree with
the bodies concerned. It is a permissive provision rather than one that would require the trust ports to agree.
I also note that the provision will come into play only if there is an association of employees and management. They will have to have formulated a proposal to maximise employee participation. The third condition, which is contained in new clause 2(3)(c), is that the employee-management team must
appear to the body concerned to be best placed to secure the implementation of such a proposal.
Will the Minister tell me what he understands by that? Does it mean the best proposal of a series of potential management-employee buy-outs, or does it mean that the management-employee buy-out seems to be the best of numerous proposals, including non-management-employee buy-outs? If the latter interpretation is intended, it begs a further question about whether there are other provisions in the Bill—or more likely, not in the Bill—which would try to give some encouragement to management-employee buy-outs.
Amendment No. 58 was a stab at answering that question. Given the resources available to us, I do not pretend that it is the best means of trying to promote an employee buy-out, but it would at least allow for the levy to be at one half of whatever is stipulated in cases in which


there is a management buy-out. That would give management and employees a certain edge in putting together a package.
6.45 pm
Amendment No. 53 not only relates to encouraging proposals to promote employee participation in the company, but suggests that, when considering schemes, the Minister should have regard to the pension and employment rights of those employed, irrespective of whether it is a management-employee buy-out.
That point was made to me last week by employees when I visited the port of Poole. They want some assurance about the transfer of pension rights and about the theoretical possibility—which may be more than theoretical—that the business might not continue as a port as we know it with stevedoring and cargo handling, and that the person purchasing the port might carry out an activity entirely different from the main port activity, which could put many people's jobs in jeopardy. I suspect that there are similar concerns at other ports. People want some assurance that the rights of employees would at least be taken into account when the Government consider various schemes. Such an assurance would be welcome, and I look forward to hearing what the Minister says.

Mr. Stuart Bell: I am grateful to you, Mr. Deputy Speaker, for calling me early in this debate. The hon. Member for Ipswich (Mr. Irvine) raised an important point on Second Reading, which was taken up in Committee. We have congratulated the Minister on the draftsmanship and workmanship of the new clauses. From what the hon. Member for Ipswich has said, it seems that the new clauses are a straight lift from the Bill that privatised Harland and Wolff. That privatisation has been a great success in terms of productivity, management and competition. I visited Harland and Wolff not long ago, and I saw how well it is doing after privatisation. If the wording of the new clauses has the same impact, we should welcome it.
My worry on behalf of those who have invested their lives in the docks is that the wording of the new clauses is not strong enough to ensure that there is worker participation that includes employees rather than simply the management. I am somewhat reassured by amendment No. 7, which says:
In exercising his powers under sub-section (2) above the appropriate Minister shall have particular regard to the desirability of encouraging the disposal to managers or other persons employed by the successor company".
That may cover my concern. The only way in which the Government could entirely cover my concern would be for them to accept new clause 12, which was tabled by the Opposition.
The point that there would be massive expenditure by any management-employee team who wished to compete with the godfathers of the shipping trade was well taken in Committee. Such godfathers might want to come into the port as it came up for privatisation, and it would be difficult for employee-management buy-out teams to compete. We know that the Tees and Hartlepool port went to celebrated merchant bankers in the City of London, who came up with a scheme that was so disastrous that it was kicked out. in the other place.

Mr. Holt: Can the hon. Gentleman tell the House how many of those godfather shipping companies have

acquired the companies in the ports industry that are already in the private sector? Is that not an unnecessary scare?

Mr. Bell: I do not think that it is a scare, because my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has mentioned one already. When I was in Northern Ireland, I talked to the people at Warren Point; they are in the same situation as Felixstowe. [Interruption.] My hon. Friend, from a sedentary position, mentions Sealink, and there are quite a number of others that I could mention, such as Hanson Trust. I could mention quite a number of companies which may not have thought of the great assets that are linked to our ports and are there for the taking under the Government scheme. We are debating a way of preventing these predators from moving in, of giving the management and the employees, who are the ones who have invested their lives in the business, a chance to maintain that investment and—to get back to our central point—of seeing that there is a benefit for the local community.
I think that we are all aware of what is out there in the wide world waiting to try to take over our ports. Therefore, anything that strengthens the concept of the management buy-out, which is a buy-out with a strong employee interest—we are not interested in a straightforward management buy-out that leaves the employees out in the cold—must have the support of the House.
My feeling is that, to overcome the essential difference between us—the emphasis in the Government wording is on management while the emphasis in ours is on employees—the House would be better served if the Government accepted new clause 12 at this stage.
I am grateful that I am following the hon. Member for Orkney and Shetland (Mr. Wallace) and I sympathise with his other problems. It is good to see that, despite the difficulties he has had in his constituency in Orkney, he has nevertheless maintained a strong interest in this Bill, both in Committee and on the Floor of the House.
I therefore hope that I can persuade the Minister, in my usual seductive fashion, to look again at new clause 12, which is our new clause, to pit that against new clauses 2 and 3 and to give us credit on this occasion for getting the balance right in the interests of the employees and of the local community.

Mr. McLoughlin: I think that this has been a useful start to the debate. I tried to explain in opening and putting forward the Government amendments that the Government are committed to seeing management and employees given every incentive and certainly put at no disadvantage. I can say, with regard to a point made by the hon. Member for Orkney and Shetland (Mr. Wallace), that the new clause is designed to enable the authority to work out which are the best placed of the management-employee buy-outs to sponsor. He may remember that that was a question on which I was asked for clarification by the hon. Member for Aberdeen, North (Mr. Hughes). That is certainly the Government's intention.
New clause 12, which the hon. Member for Stoke-on-Trent, North (Ms. Walley) tabled, is basically a well-balanced combination of the unacceptable and the unnecessary. Taking the latter first, subsection (2) of the proposed new clause has been anticipated in the Government's amendments on financial assistance in new clause 2 and, in the case of the PLA, new clause 3. As far


as the unacceptable part is concerned, subsection (1) would completely undermine the Government's policy of inviting competitive bidding for the ports by giving a MEBO team first refusal in every case. That goes far beyond the intention of providing a level playing field for all possible potential bidders. We believe that it is right to establish the market price of a port by competitive bids rather than by a theoretical valuation. If there were to be a theoretical valuation and that proved to be wrong, who would be the people shouting the loudest about the Government's selling off at a lower price than could be expected? We all know who would be shouting the loudest and most vociferously. It would obviously be the Opposition.

Ms. Walley: In view of what the Minister has just said, will he tell the House why it was possible to do that in the case of Tees and Hartlepool, and to come to an agreement on £62 million—my hon. Friends will correct me if I am wrong—and comment on the fact that there should be tax amounts based on £31 million, that is 50 per cent? Why was it possible to do that in the case of Tees and Hartlepool but not possible in the case of the other trust ports? Will the Minister tell the House that?

Mr. McLoughlin: The House is dealing with a Government Bill; it is not dealing with the private Bill that passed through the House and has not made all the progress which its promoters would have liked.

Mr. Ted Leadbitter: The Minister, of course, is seeking an explanation for the point which my hon. Friend put, but the essence of the matter is this. The Government supported the Tees and Hartlepool Port Authority Bill; they supported the principles and the financial measures in that Bill. Therefore, my hon. Friend's question is pertinent. Why is it not now a possibility even under this Bill?

Mr. McLoughlin: The Government made their position quite clear at the time of the starting of the Tees and Hartlepool Port Authority Bill; we said that we would bring forward our own legislation which would enable all trust ports to follow the system of privatisation. That was not the case at the time when Tees and Hartlepool first promoted their private Bill. The House is not now dealing with a history lesson on the earlier private Bill; it is dealing with the Bill that is before it.

Mr. Leadbitter: The Minister says that that was not the case when we were dealing with the private Bill, but he must recognise—I am sure that he will not deny it—that the Bill before us was going through the House a few weeks behind the Tees and Hartlepool Port Authority Bill, which had been through the House and was in the Lords. Therefore, his explanation is not adequate.

Mr. McLoughlin: I do not have the precise dates before me, but I think that the hon. Gentleman will find that the Tees and Hartlepool Port Authority Bill began its stages in the House in March 1989 and the Government's Bill was announced in November in the Gracious Speech.

Mr. Leadbitter: The hon. Gentleman's dates are wrong. The Bill did not come to the House until 27 November 1989, and it was kept in the House for many months after that in Committee, and some weeks after that before hon.

Members could examine the Tees and Hartlepool Port Authority proposals on site. Therefore, I am suggesting to the Minister—and I am sure that he will react honourably to this—that the point he is making to my hon. Friend is invalidated because the private Bill was running only a few weeks ahead of the Bill to which he is now addressing himself.

Mr. McLoughlin: I should like to correct myself and apologise, in part, to the hon. Gentleman. He is right that it was in November 1989. And of course the Gracious Speech in which the Government's intention to bring forward a ports Bill was announced was in November 1990. So I was perfectly right in saying that the Tees and Hartlepool Port Authority Bill started a long time before the Government secured the position in the legislative programme to bring forward the Bill that is before the House tonight.

Mr. Holt: It may assist my hon. Friend and all Opposition Members who are floundering to know that I moved the Second Reading of the Tees and Hartlepool Port Authority Bill on 15 March 1990, when 29 Opposition Members voted against it

Mr. McLoughlin: I am grateful to my hon. Friend. Perhaps, Mr. Deputy Speaker, we can make some progress instead of going through a history lesson. I want to deal with various amendments put forward by the hon. Member for Orkney and Shetland.
First, I believe that his amendment No. 53 is unnecessary, because the Bill already takes care of some of the hon. Member's concerns and a tabled Government amendment would take care of the remainder. The transfer of undertakings regulations apply to the employment rights of those affected by transfers under the Bill. Although the regulations do not apply to occupational pension schemes, the general transfer clause 2(2) —this is the important point—ensures that the rights and liabilities of a port authority would be transferred to its successor company and the rights and liabilities of the employees in relation to such a scheme would continue. It is later on, when we come to deal with Tilbury, for special reasons that were discussed in Committee, that the position is different. I therefore hope that it will be seen that there is no need to pursue amendment No. 53.
The amendment would also require the Minister to have regard to the promotion of employee participation. Provision for this is already made in Government amendment No. 7, which is cast in similar terms and would have substantially the effect desired by hon. Members. I could offer the hon. Member for Orkney and Shetland a long explanation in respect of amendments Nos. 57 and 58, although I do not know whether I need to do so. I realise that the amendments are well intentioned, but they would give too much of an advantage, and it would not help management-employee buy-outs to reduce the levy to 25 per cent. in such cases. The hon. Gentleman should think through what effect that might have on the base price and on price pegging. We will deal with the matter in greater detail when we discuss the proposed levy.

Mr. Wallace: The Minister said that the amendments would give too much of an advantage. Then he said that they would not help. Which of those statements is right?

7 pm

Mr. McLoughlin: The amendments would not help in respect of the amount that would have to be paid, but they would not provide the level playing field that the Government want, either. Although my two statements may appear contradictory, I believe that they can both be defended.

Mr. Eddie Loyden: If the Government are serious in claiming that they want to give port employees the opportunity to be involved in management-worker bids, why does the Bill not discriminate in favour of such people? The people most likely to ensure that a port continues to function as a port are those who have spent a lifetime working in it. Probably generations of their families have worked in the industry, too. The Government pay lip service to the idea, but they are not prepared to remove the disadvantages to such people, even if they recognise them.

Mr. McLoughlin: It is partly because of such considerations that the Government seek to give people who have worked in the ports all their lives and contributed a considerable amount a share in their companies, and to allow them to play a more positive role. They are likely to benefit the most if companies are successful, and that is precisely what privatisation will achieve.
I hope that the House will accept the Government amendments, and that the Opposition will feel able not to press their amendments.

Mr. Leadbitter: I want to reason out my argument with the Minister, without challenging him, because that is the best way to elicit a response to the good sense in new clause 12.
I apologise for repeating myself, but the Tees and Hartlepool Port Authority Bill was brought to the House of Commons, without consultation with anybody, on 27 November 1989—the deadline for the submission of private Bills. During the following year, that Bill spent most of its lame in the House of Commons The proceedings of the Committee that dealt with it were protracted and its deliberations were held up, because its members insisted on seeing the Tees and Hartlepool port authority on site—much against the wishes of the Chairman of the Committee. The present Bill eventually came to the House in the latter part of 1990, following the Queen's Speech. A procedural motion was needed for the reference, following a message from the House of Lords, to take the Bill to the other place.
Perhaps the Minister will think again about new clause 12, which says:
Financial assistance shall be available in respect of bids put together substantially by management and employees".
Under the Tees and Hartlepool Port Authority Bill the management would have been permitted to seek financial resources to assist a management takeover. Such a takeover would have involved, first, the setting up of a holding company and, secondly the port authority's becoming a subsidiary company of the holding company. The Government supported that Bill then and agreed that the Tees and Hartlepool Port Authority Bill could raise its own finances. The Minister's approach to this Bill contradicts the Government's previous position.
Two or three months ago, the House of Lords turfed out the Tees and Hartlepool Port Authority Bill because it

was said that the Government were introducing a Ports Bill. The Government must have been cognisant of the provisions of their own Bill, which rejects financial assistance for management takeovers, whereas the Tees and Hartlepool Port Authority Bill allowed for such assistance. That reveals a dichotomy in Government thinking. They supported the provisions of the private Bill on management takeovers, but the public Bill does not embody support for the same principle. The Minister is a reasonable man. He must respond to that argument. I do not think that his promotion prospects will be diminished if he responds in the proper manner.

Mr. McLoughlin: I now have the timetable before me, and I hope that it will not stretch your patience too much, Madam Deputy Speaker, if I give some details. As the hon. Member for Hartlepool (Mr. Leadbitter) said, the Bill was laid on 27 November 1989 and Second Reading was on 15 March. I remember enjoying the hon. Gentleman's speech on that occasion, although I hope that his speeches tonight will be shorter. The Bill went into Committee on 15 May and came out on 25 July. Third Reading was on 22 October 1990. The Bill had therefore gone through all its stages in this House when the Government's intention to introduce a Ports Bill in their own time was announced in the Gracious Speech. A revival motion was debated after the Gracious Speech, on 4 December.
On Second Reading, in response to a question about the private Bill from the hon. Member for Greenock and Port Glasgow (Dr. Godman), my right hon. and learned Friend the Secretary of State said:
No such advice will be given to the sponsors of that Bill or to the sponsors of the Tees and Hartlepool Port Authority Bill which is going through this House. Those private Bills were sponsored by the port authorities in question. It is entirely for them to decide whether they wish either to continue with their Bills or to wait and then use the provisions of this Bill." —[Official Report, 28 January 1991; Vol. 184, c. 670.]
The Tees and Hartlepool Port Authority Bill did not go all the way through the House of Lords, although I understand—I am not 100 per cent. sure of the procedure in the other place—that an attempt could be made to overturn the Committee's decision. We have always made it perfectly clear, as the Secretary of State did on Second Reading, that the provisions of any of the private Bills before the House at that time might come within the scope of this Bill if they did not succeed. That is what the House is discussing now.

Mr. Holt: Before he finishes speaking, will my hon. Friend reflect on what the hon. Member for Hartlepool (Mr. Leadbitter) said about the reasons why their Lordships threw out the private Bill of which I was a sponsor? The report said that it was not felt that the management would have the experience to move into new areas of activity. What has changed, now that we are dealing with a Government Bill? Why should managements now be deemed to have sufficient experience to overcome the objections voiced in the House of Lords?

Mr. McLoughlin: We have always made it plain that any trust port can come under the provisions of the Government's Bill. I cannot be responsible for the reasons on which the upper House decided, in its wisdom, to report. All that I can be responsible for is the Bill at present before the House of Commons. I commend the new clause.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 3

FINANCIAL ASSISTANCE FOR PROPOSAL TO MAXIMISE EMPLOYEE PARTICIPATION IN EQUITY OF THE COMPANY

' .—(1) Where the Port Authority propose to form or have formed a company in pursuance of section 18 above ("the relevant company"), they may on such terms as they think fit agree with any persons who at the time of the agreement qualify for assistance under this section—

(a) to indemnify those persons in respect of the whole or any part of any expenditure to which subsection (3) below applies; or
(b) to discharge on their behalf the whole or any part of any liability to which that subsection applies.

(2) For the purposes of subsection (1) above persons qualify for assistance under this section if—

(a) each of them satisfies the employment condition;
(b) they have formulated a proposal for maximising participation by employees of the relevant company in ownership of its equity share capital; and
(c) they appear to the Port Authority to be best placed to secure the implementation of such a proposal.

(3) This subsection applies to any expenditure or liability of the persons concerned incurred wholly and exclusively for the purposes of the proposal mentioned in subsection (2)(b) above.

(4) A person satisfies the employment condition as regards assistance under this section—

(a) before the transfer under section 19(6) above, if he is employed by the Port Authority in that part of their undertaking which consists in operating the port of Tilbury; and
(b) after that transfer, if he is employed by the relevant company.'.—[Mr. McLoughlin.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 4

TREATMENT OF NET PROCEEDS OF DISPOSAL OF OWNERSHIP

' .— (1) Subject to subsection (2) below, an amount equal to the aggregate amount of the sums paid by the authority to the successor company under section 4(4) above shall be treated as accumulated realised profits of the successor company.

(2) The amount which under subsection (1) above falls to be treated as accumulated realised profits of the successor company shall be—

(a) increased by any amount by which the asset value on the transfer to the successor company under section 7 above exceeds the liability amount; or
(b) reduced by any amount by which the liability amount on that transfer exceeds the asset value;

as the case may require.

(3) In subsection (2) above—
the asset value" means the aggregate value of the assets transferred; and
the liability amount" means the aggregate amount of the liabilities transferred.

(4) For the purposes of this section the value of any asset and the amount of any liability transferred to the successor company under section 7 above shall be taken to be its value or amount determined in accordance with any provision made by the scheme under paragraph 9 of Schedule 1 below (transitional provision as to accounts, etc., of the successor company).'.—[Mr. McLoughlin.]

Brought up, and read the First time.

Mr. McLoughlin: I beg to move, That the clause be read a Second time.
This is a short new clause, intended to make clear the accounting treatment of the net proceeds of sale of a port after the levy on proceeds and any tax liability has been paid. Without such a specific provision, there might have been doubt whether the net proceeds of disposal could be treated as accumulated realised profits of the successor company available for distribution. The new clause makes it clear that that is the case.

Mr. Bell: I am grateful to the Minister for giving that explanation to the House. I read the entire new clause with great perplexity throughout the afternoon. I even missed the statement of the Secretary of State for the Environment on the so-called abolition of the poll tax. I still could not make head nor tail of the new clause.
As I understand it, the Minister said that the new clause defines an asset on which tax has already been paid. When I read the new clause in relation to schedule 1(9), I wondered how I would annotate the Bill for legal publishers and how I would square schedule 1, paragraph 9 with the new clause. I wondered what explanation I would give. Is there a contradiction in terms between schedule 1, where the assets are described, and new clause 4, as explained by the Minister?

Mr. McLoughlin: I think that the answer to that question is no.

Mr. Bell: The Minister is improving somewhat on Mark Twain, who, when asked the distance from Nashville to New Orleans on the Mississippi, said with great prompitude that he did not know. I suspect that that was the true answer that the Minister gave. It was with a nod of the heads of the—two, four, six—seven officials in the Box that he was able to give such a prompt answer. In any event, the explanation seems to be that the assets of the port are assets on which taxes have already been paid and on which taxes are not likely to be paid a second time.

Mr. Prescott: Is new clause 4 in any way related to the new clauses which affect clause 16, in which estimates are made of what the assets are, what will be taxed and what will be the Government's take? I take it that the Minister does not think that that is so.

Mr. McLoughlin: Let me reassure the hon. Gentleman. This is a fairly technical matter. We shall come to the points that he made, and it is clear that we shall have a long debate on them. The new clause has been tabled simply for the avoidance of doubt and uncertainty and to make clear the accounting treatment of receipts of a somewhat unusual nature, in that they represent part of the purchase price returning to the purchaser. We have sought to clarify that matter.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 1

THE REQUIRED PROVISION FOR THE PROTECTION OF PENSION RIGHTS

' .— (1) Subject to subsection (2) below, this section applies to—



(a) any person transferred by virtue of the transfer under section 19(6) above from the employment of the Port Authority to that of the company who—

(i) immediately before the date of the transfer was a member of the Port of London Authority Pension Fund ("the Fund"); and
(ii)ceased to be such a member by virtue of the transfer; and

(b) any person who, after that date, acquires pension rights under any pension scheme provided or amended in pursuance of any provision made in accordance with the following provisions of this section by the scheme under section 19 above (a "relevant pension scheme") by reason of the death of a person within paragraph (a) above;

but only, in the case of any person within paragraph (b) above, as respects the pension rights by virtue of which he falls within that paragraph.

(2) Any person to whom this section applies may elect in such manner as may be prescribed that this section shall cease to apply to him; and if any person within subsection (1)(a) above—

(a) ceases to be in continuous employment; or
(b) voluntarily withdraws from a relevant pension scheme;

otherwise than in such circumstances as may be prescribed, this section shall cease to apply to him except as respects pension rights which have accrued to him before that time.

(3) The required provision for the protection of pension rights mentioned in section 20(1A) above is provision for the purpose of securing that—

(a) no person within subsection (1)(a) above is placed in any worse position by reason of—

(i) ceasing to be a member of the Fund by virtue of the transfer of employment mentioned in subsection (1)(a); or
(ii) being prevented from continuing to participate in or acquire pension rights under a relevant pension scheme by any subsequent change of employer which does not affect his continuity of employment;

(b) no person to whom this section applies is placed in any worse position by reason of—

(i) any winding up, in whole or in part, of a relevant pension scheme; or
(ii) any amendment of a relevant pension scheme which results in benefits under that scheme being reduced or contributions by employees being increased.

(4) The references in subsection (3) above to any worse position shall be construed, in relation to a person within subsection (1)(a) above, as references to a position which is any worse than his position immediately before he ceases to be a member of the Fund.

(5) Provision made by virtue of subsection (3) above may impose duties (whether as to the provision or amendment of pension schemes, the purchase of annuities, the making of payments or otherwise) on persons, other than the Port Authority, who are or have been employers of persons within subsection (1)(a) above.

(6) Duties imposed on any person by any such provision may include duties owed to persons of whom he is not and has not been an employer.

(7) The scheme under section 19 above may also provide for any dispute arising under any such provision to be referred to arbitration.

(8) So much of Schedule 13 to the Employment Protection (Consolidation) Act 1978 as has effect for the purpose of ascertaining whether any employment is continuous shall apply for the purposes of subsections (2) and (3) above as if those subsections were contained in that Act.

(9) In this section—
employer", in relation to a person employed by a company which is a wholly-owned subsidiary of another company, includes that other company;

pension", in relation to any person, means a pension of any kind payable to or in respect of him, and includes a lump sum, allowance or gratuity so payable and a return of contributions, with or without interest or any other addition;
pension rights", in relation to any person, includes—

(a) all forms of right to or eligibility for the present or future payment of a pension to or in respect of him; and
(b) any expectation of the accruer of a pension to or in respect of him;

and includes a right of allocation in respect of the present or future payment of a pension;
pension scheme" means any scheme for providing pensions to or in respect of any persons;
the Port of London Authority Pension Fund" refers to the Port of London Authority Pension Fund established under section 5 of the Port of London Act 1928; and
prescribed" means prescribed by the scheme under section 19 above.'.—[Mr. McLoughlin.]

Brought up, and read the First time.

Mr. McLoughlin: I beg to move, That the clause be read a Second time.

Madam Deputy Speaker (Miss Betty Boothroyd): With this it will be convenient to take the following: Amendment No. 49, in clause 19, page 16, line 12, at end insert—
'(5A) The scheme shall contain provisions for the setting up of a mirror-image pension scheme identical in all ways to any scheme operated by or funded in whole or in part by that authority. The Secretary of State shall provide for the funding of this scheme equivalent to the amount held in respect of each member's accrued pension benefits, allowing for expected future pay increases. Bulk transfers without consent should be conditional upon the Actuary to the transferring scheme supplying a certificate of broad equivalence. Pensionable service shall be regarded as not having terminated in any change of scheme.'.
Government amendment No. 4.

Mr. McLoughlin: The purpose of new clause 1 is to require the transfer scheme under clause 19 to include provision for the protection of pension rights of members of the Port of London Authority pension fund who are transferred from the employment of the PLA to that of the new company and who cease to be members of the fund by virtue of the transfer. That point caused anxiety among all members of the Committee. I hope to explain to the House how the Government intend to tackle it.
The protection of such pension rights was an important point and it was raised often in Committee. It was mentioned by my hon. Friend the Member for Thurrock (Mr. Janman). In Committee I said that it was the intention of the PLA that benefits available to employees joining the new company would be no less favourable than those under the PLA pension fund, and that the Government intended to give statutory effect to that. New clause 1 and amendment No. 4 have been tabled to implement the undertaking that I made to the Committee.
I said to the Committee that the detailed provision was likely to be more suitable for inclusion in the scheme of transfer under clause 19 than in the Bill itself, and this has turned out to be so. The details will therefore go into the scheme, and the purpose of these is to require the scheme to include such provision.
The House will appreciate that the provisions of the new clause are complex. In essence, they establish a category of protected persons and they require that such


protected persons are not placed in a worse position through ceasing to be members of the PLA pension fund or for other specified reasons, such as the winding up or amendment of a pension scheme provided by the successor company.
The persons to be covered by these provisions are transferred employees who are contributing members of the PLA pension fund immediately before transfer day and certain dependants of such employees. Transferred employees will retain their protection so long as they are "continuously employed", as defined in the clause.
The scheme under clause 19 will require the employer of the protected persons to ensure that such persons will continue to enjoy pension rights that are no worse than they would have been if they had continued to be members of the PLA pension fund as it was before the transfer date. The clause also enables any dispute in respect of the protective provision to be referred to arbitration.
I have given only a summary of new clause 1, but I hope that the House will recognise from the details of the new clause that we have been concerned to make full provision for the protection of the people concerned.
Amendment No. 4 is a paving amendment for the new clause. It amends clause 20, which provides for the supplementary provision that may be included in a scheme under clause 10. Amendment No. 4 inserts into clause 20 a requirement for the scheme to include the provision for protection of pension rights described in subsection (3) of new clause 1.
Amendment No. 49, tabled by Opposition Members, has basically very similar objectives to those in the amendments which my right hon. and learned Friend the Secretary of State has tabled. I am told that some of the phraseology used would be difficult to interpret. It also seems to require the Secretary of State to fund a pension scheme to be available to the transferred employees and this would be quite unacceptable. I hope, therefore, that Opposition Members will withdraw their amendment and that the House will accept the amendments that I have described. They should go a long way to allaying the fears of the employees to be transferred from the PLA.

Ms. Walley: We are pleased that the Minister has introduced proposals to deal with pensions. He was right to say that the interview caused great anxiety in Committee, certainly among Opposition Members. We pressed the Government on the matter at great length. The Minister referred to the hon. Member for Thurrock (Mr. Janman). I do not see the hon. Gentleman in the Chamber. I wonder where he is.

Mr. McLoughlin: I hope that the hon. Lady will not press the non-attendance of my hon. Friend. He is serving on a Select Committee, so he cannot be here this afternoon.

Ms. Walley: I am grateful for that explanation. I was referring to the debates and disagreements in Committee. I should have expected the hon. Gentleman to be here, but we have had an explanation from the Minister of his whereabouts.
We had a commitment from the Minister that the Government would return with the mechanics of introducing detailed proposals to enshrine the pension rights of the workers in the legislation. We are pleased that

the pressure that we applied has borne fruit and that the Government have addressed the issue. Previously the Bill ignored it.
The Minister referred to our amendment, which sets out the principles of a pension scheme that will in no way undermine the rights of the Tilbury workers and those remaining with the Port of London Authority. The Minister promised to state in the Bill that the same benefits would be available from the new company. I want to press him further. I want from him an absolute assurance that the Government's amendments, technical and complicated as they are, will satisfy the concerns of the port of London work force.
We debated the matter at length in Committee, when we echoed the concerns of the Transport and General Workers Union and of the prospective candidate for Thurrock, Andrew MacKinley, whom I am pleased to see in the Strangers Gallery.

Madam Deputy Speaker: Order. As the hon. Lady knows, under our procedures we do not refer to people outside the Chamber.

Ms. Walley: I am grateful for that advice, Madam Deputy Speaker.
I was interested to hear the Minister say that the amendments which he has tabled would mean that the employees would not have worse conditions at the date of the sale. One point which we should address is that employees who are covered by the Port of London authority pension scheme can look forward to index-linked benefits, because that is a healthy fund, with large investments.
I appreciate that we are dealing with a complicated and technical issue and that what the port of London pension fund can and cannot do is enshrined in legislation. However, I want to press upon the Minister concerns that have been brought to my attention by people employed by the Port of London authority. I quote directly from a letter:
It is therefore most imperative that, if it is not possible to remain within their own fund, then Government statutes should provide that whatever future pension changes that are imposed on us, they will not diminish in real terms the members' final settlements.
The pension benefits of some 400 workers may not seem an important issue in direct comparison with the other matters with which we are concerned in the Bill, but pensions will clearly be crucial when those workers reach retirement age. It is up to the House to protect their interests fully. I do not know whether the Minister will address the matter in more detail, but we do not want people to be worse off as a result of the Government's proposals. We need further clarification from the Minister.

Mr. Loyden: I support fully what my hon. Friend the Member for Stoke-on-Trent, North (Ms. Walley) has said. Many of us have been concerned in the past about pensions when employees have been transferred from one company to another. In many cases the workers find themselves worse off. I hope that the Minister will take into account the principle that those covered by the pension scheme at present will be no worse off and will gain any advantages that accrue from index linking in future. My hon. Friend has made the case, and I hope that the Minister will respond positively.

Mr. McLoughlin: I do not think that it was fair of the hon. Member for Stoke-on-Trent, North (Ms. Walley) to maintain that the point was ignored earlier. As I said in Committee, the Government always intended to address the point that Tilbury was different from all the other trust ports in that it was being split from the Port of London authority. The problem did not arise from the other trust ports, where there was a straight transfer.
For the hon. Lady to say that the matter was ignored was to over-egg the importance of the Opposition's case. We always accepted that it would be an important part of the Bill. Certainly I would not say that it was not important for the House to spend time on the pensions of 400 people. It is exceptionally important and vital for those people that we get the clause right.
That is why the Bill will provide that the scheme proposed for the privatisation will ensure that those people are treated in the same way as those who are in the PLA scheme. It is impossible for them to remain in that scheme, because they will cease to be employees of the port of London. I do not think that anybody should be under any misapprehension that we intend to make sure that they get equal treatment to those who remain in the scheme.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 9

SUPPLEMENTARY AND CONSEQUENTIAL PROVISIONS RELATING TO LEVY UNDER SECTION 16

' .—(1) The Secretary of State may, with the consent of the Treasury, by order substitute for any percentage for the time being specified in section 16(2) above such other percentage as may be specified in the order.

(2) Subject to subsections (3) and (4) below, any amount payable or paid by any company in respect of levy under that section on any disposal shall be allowable as a deduction from the consideration in the computation under the 1979 Act of the gain accruing to that company or to any other person on the disposal.

References below in this section, in relation to any disposal on which levy under that section is chargeable, to the levy amount are references to any amount so payable or paid in respect of the levy.

(3) Subsection (2) above shall not apply where—

(a) apart from the deduction of the levy amount an allowable loss would accrue to the company or to any other person on the disposal; or
such a loss would so accrue if the levy amount were deducted;

but in the latter case the person making the disposal shall be treated for the purposes of corporation tax on chargeable gains as if the disposal had been made for a consideration of such amount as would secure that neither a gain nor a loss would accrue to that person.

(4) Subsection (2) above shall not apply where a disposal on which levy under section 16 above is chargeable is one which, by virtue of section 267(1) or 273(1) of the Income and Corporation Taxes Act 1970 (company reconstructions and amalgamations and transfers within groups of companies), is treated as made for a consideration ("the original consideration") giving rise to neither a gain nor a loss.

(5) Where in any case within subsection (4) above the original consideration is less than the market value at the time of the disposal of the land or interest in land which is the subject of the disposal, the consideration for which the disposal is treated by the provision in question as being made shall be increased by—

(a) the levy amount; or

(b) the excess of that market value over the original consideration;

whichever is the less.

(6) Except as provided above in this section, no amount payable or paid in respect of levy under section 16 above or interest on such levy shall be allowed as a deduction or otherwise taken into account in computing any income, profits or losses for any tax purposes.

(7) There shall be paid into the Consolidated Fund—

(a) all payments received by the appropriate Minister in respect of levy under section 16 above; and
(b) all interest paid to the appropriate Minister by virtue of any provision of an order under that section.

(8) In this section "allowable loss" has the same meaning as in the 1979 Act; and in section 16 above and this section—

(a) "the 1979 Act" means the Capital Gains Tax Act 1979; and
(b) references to an interest in land include any right in, over or in relation to land.'.—[Mr. McLoughlin.]

Brought up, and read the First time.

Mr. McLoughlin: I beg to move, That the clause be read a Second time.

Madam Deputy Speaker: With this it will be convenient to discuss the following: Government amendments Nos. 27 and 28.
Amendment No. 47, in clause 16, page 12, line 21, leave out from 'be' to end of line 34 and insert
'charged at the rate of one hundred per cent. on the amount of the gain, and shall be payable by the chargeable company to the Secretary of State.'.
Government amendments Nos. 29 to 37.

Mr. McLoughlin: The amendments constitute a significant change to the arrangements envisaged in the Bill for the Government's levy on onward disposals of land. They take account of almost all of the concerns that were expressed about the arrangements by my hon. Friends in Committee. They do not, I surmise, take account of the views of the Opposition, because there was a total divide in Committee on the points. I do not wish to say anything further about what happened in Committee, but instead to deal with the heart of the matter.
The Government take the view that the sale of a port under the Bill will be carried out through a process of competitive tendering. Nevertheless, it is still possible that land which some of the ports hold will turn out to have a significantly higher value than was appreciated at the time of sale.
In such cases, the subsequent sale of such land would be subject to capital gains tax. But we consider that there should be a further levy on the enhanced value of such property to prevent excessive windfall gains for the purchaser of a port in the same way. As I explained a few minutes ago, we see the levy on the proceeds of disposal as preventing excessive windfall gains at the time of sale.
Of course, as I made clear in Committee, one of our objectives in seeking the privatisation of major trust ports is to make it easier for them to realise the value of their property holdings, so we need to strike a careful balance between preventing excessive windfall gains and deterring the port companies from turning their property to best account. The balance is difficult, and a number of my hon. Friends, who, I expect, are representative of opinion on this side of the House as a whole, made it clear during debates in Committee that they did not feel we were striking the right balance, but instead that the scales were too loaded against the ports.
Amendment No. 27 clears the way, in drafting terms, for amendment No. 28. That amendment is designed to answer most of the points that my hon. Friends have made. First, it defines the disposal of land or an interest in land in terms of the Capital Gains Tax Act 1979. That makes it clear that we are envisaging not a new tax, but rather a levy, or surcharge based on existing tax earnings. In particular, this responds to concern about the levy being charged for deemed disposal on the granting of planning permission. With the new formulation, that falls outside the scope of the levy, and, indeed, amendment No. 32 specifically deletes it from the Bill.
Secondly, although we continue to see the need for the levy to operate over 10 years, because a reduction to five years would encourage companies simply to defer disposals until they escaped levy altogether, we accept that, after the first five years, the rate should be tapered.
Thirdly, we have also taken account of the combined effect of the levy and of CGT on gains resulting from land disposals. This is the most obvious example of the need to strike a balance that I have just mentioned. Accordingly, the rate of levy is to be 25 per cent. for the first five years, reducing to 20 per cent. in years six and seven, and to 10 per cent. for the rest of the 10-year period.
If I may anticipate the provisions in new clause 9, the House will see that subsection 2 provides for the levy to be deductable against capital gains for the purpose of capital gains tax. That means that, for the first five years, the maximum combined effect of the levy and of CGT will be 49·75 per cent. of the chargeable gain, falling after five years to 46·4 per cent., and after seven years to just under 40 per cent. I pointed that out to Committee members in a letter that I wrote to them a few weeks ago, because I knew that they would want the full details of that important matter.
The remaining amendments on clause 16—Nos. 29 to 36—are drafting consequentials either of amendment No. 28, or simply of the need to move one or two of the existing provisions in clause 16 into new clause 9.
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Two other points of interest to my hon. Friends will be dealt with in due course by the order to be made by my right hon. and learned Friend the Secretary of State, under subsection (3). First, that order will provide that the base date for the valuation of land for the purpose of the levy will be the date on which the company ceases to be a wholly owned subsidiary of the former port authority, that is the date on which the disposal begins. The base value will be the market value at that date.
Secondly, there is clearly little point in applying the levy to minor disposals of land. Accordingly, a de minimis provision is needed, and the order will provide that individual disposals worth less than 2 per cent. of the proceeds of sale of a port, provided that they fall below £200,000, will be excluded from the levy. The order will also provide that the levy will be payable only on disposals of a value amounting cumulatively over the whole of the clawback period to more than 10 per cent. of the proceeds of sale of a port, provided that they do not exceed a cumulative total of £500,000.

Mr. Wallace: May I respond to the Minister's point that the base date for calculating the value and the increase

will be the date of transfer to the new company, when the company will cease to be a subsidiary of the port? Does that mean that, if the value of transfer is fixed on, say, 1 January for a transfer that will take place on I May. and planning permission is obtained in March for land that, accordingly will increase substantially in value after the date on which the price was agreed, that increase will not be reflected if there is a subsequent sale at a much enhanced price?

Mr. Mcloughlin: I shall come back to the hon. Gentleman on that issue when I have thought more about his question. I shall try to answer him at some stage during the debate.
New clause 9 consists partly of provisions transferred from clause 16 and the provision to which I have already referrred, and makes the levy deductible against gains for the purpose of capital gains tax. It also includes provisions, in subsections (3) to (5), to ensure that the payment of a levy will not be allowed to create a loss for the purpose of capital gains tax. Finally, amendment No. 37 is a drafting consequential later in the Bill.
This is an important aspect of a privatisation of this sort, where unforeseen gains may arise on the subsequent sales of land. In drawing up these amendments, we have taken the views expressed in Committee carefully into account, and I hope that my hon. Friends, if not Opposition Members, feel that the package of measures that we now have extends the right balance of interests between the new port owners and the taxpayer beyond the disposal into the early years of privatisation. I therefore hope that the amendments will be acceptable to the House.
May I return to the question of the hon. Member for Orkney and Shetland (Mr. Wallace)? The example that he gave might be the case, but I shall confirm that to him later. If necessary, I shall write to him in due course.

Mr. Leadbitter: I hope that the Minister will accept that the House needs to be quite clear about the meaning of new clauses 9 and 16 and the amendments under consideration.
New clause 9 states:
The Secretary of State may, with the consent of the Treasury, by order substitute for any percentage for the time being specified in section 16(2).
That is rather a dog's breakfast. It does not tell the House very much—we shall have to vote on it—about the impact that it may have on the ports. For example, the Tees and Hartlepool port authority had disposable assets of some £60 million. The Minister should recognise—we have often repeated the fact—that, when the levy under that Bill was 50 per cent. or nearly £30·5 million, we understood the extent to which the port authority would be denied half the value of the disposable assets and that the holding company would have the rest. That would go against the raising of moneys for the flotation. Moreover, we could measure the extent to which the subsidiary company—the port—would be disadvantaged.
The Minister is not listening to me. Hon. Members would be wise to consider the point that I am making. The new clause affects many ports and the employment prospects of those who work there. Although hon. Members may not have job security, we are much more privileged than those who must suffer the vicissitudes of economic recessions. The issue concerns jobs, men and management, and the extent to which the Government are


seeking, rather greedily, to accrue to the Treasury moneys which they have not helped to earn. That is the nub of the problem.
Will the Minister consider this serious matter objectively? Before the House votes, it is entitled to know the exact implications of this important new clause and the amount of money that we shall take from those ports, which will not have been earned by the Government. It will be a windfall for the Treasury, which will benefit in the same way as it has in every privatisation so far. The Government have done little for the economy but, by selling off the plate and silver, they have given the Treasury millions of pounds.
The Bill deals with small ports as well as large ones. To put it in perspective, the Tees and Hartlepool port authority is the third largest port in the United Kingdom in terms of volume of trade. However, the Bill deals with many other ports which come way down the scale, with assets of less than £60 million or even as low as £20 million.
If, under new clause 9, the Secretary of State is allowed, with the usual wording,
with the consent of the Treasury"—
not of the House—to tinker with the provisions already in the Bill and change the circumstances in which the levy would be applied, thereby altering the percentages in the Bill, we should know beforehand what effect that will have on the ports that the Government seeks to privatise.
Anyone who runs a business would want to know his returns as a percentage of his turnover and the tax that he would have to pay. Somebody may buy into the business. If that somebody is not the House of Commons or those who draft legislation but the Government of the day with the consent of the Treasury, that is not an interesting business arrangement, because they are in the same pot together. The Prime Minister is the First Secretary to the Treasury. Naturally, the business wants to know the course that the Government will take in the absence of any democratic processes being put into effect.
The Bill provides that in the first year
the levy shall be 40 per cent. of the corporation tax payable by the company.
In the second year, it will be 32 per cent.; in the third, 24 per cent.; in the fourth, 16 per cent.; and in the fifth, 8 per cent. How have the Government arrived at these percentages? Instead of 40 per cent. in the first year, why not 41 per cent. or 39 per cent? Instead of 32 per cent. in the second year, why not 28 per cent?
The term "corporation tax" does not present us with a specific figure. As we are taking money from other's pockets, the House is entitled to know by what tests, criteria or judgments the Government arrived at the percentages to which I have referred. We all know that, if there are no factors in an equation save X, the value of X can quickly be ascertained. Does the House know what "corporation tax" means in the sense of real money?
I am expected to vote on these issues this evening. Well, perhaps it would be more accurate to say that, according to our procedures, the Government would welcome a decision by the Opposition not to vote on the new clauses and amendments to enable them, the Government, quickly to take the Bill through the House this evening. Of course no one wants to stop the Government taking their Bill through its various stages of consideration unless an important matter of principle is involved. Governments govern and Governments get their Bill, but all Administrations have a responsibility to explain to the

House how they have arrived at their figures, bearing in mind the fact that the Treasury will be given consent to change the figures.
In effect, we are being asked to approve the new clause and then to go to the Strangers' Bar for a pint of beer, or the Tea Room for a cup of tea or coffee, and say to ourselves, "We have done a good job. A non-elected body called the Treasury will be able to change the figures in future." That is not a responsible way to deal with our ports. I hope that the Minister will respond to his natural inclination to honesty and explain why elected Members of this place are expected to agree to the Treasury being empowered to alter the figures in future.

Mr. Prescott: We are discussing a controversial issue, and in Committee certain Conservative and Opposition Members united to defeat the Government. There will certainly be a Division this evening. I hope that I can have the attention of the Minister. I feel that too many discussions took place in Committee between the hon. Gentleman and the Government Whip. That led to a motion being tabled that meant that the new clause would be discussed at a late stage during our consideration of the Bill on Report. It is the usual practice of the House to deal with new clauses, and especially those tabled by the Government, at an early stage on Report. It was argued, however, on the basis of tortuous reasoning, that new clause 9 could be dealt with at a late stage. It happens, of course, to be the most controversial new clause and one on which there will be a Division.
I say with all respect to the Minister that my hon. Friends have worked well with him in a spirit of co-operation despite our opposition to the Bill. The hon. Gentleman could have given some warning of the move which I have described instead of causing us to be heavy at this stage. We said that we did not agree with their proposal and would debate the issue in full. That, of course, would have delayed progress. I think that the Government indulged in shoddy practice, especially as the Minister wrote to inform me of the formula that had been adopted for the clause on 2 April, almost 21 days ago.

Mr. McLoughlin: Perhaps it would be appropriate for me to apologise to the hon. Gentleman. I am not trying to steamroller the Bill through the House. When it comes to any Divisions that might take place, he might then understand why we took the course to which he has referred.

Mr. Prescott: I shall wait to see what happens. The Minister has given a generous apology and it is accepted. The reason behind the Government's actions is another matter, and one that could be debated all night. As I have said, I accept his apology.
Where will the money come from? That is the controversial issue. How will the Treasury get its share of the money that is in the land banks? Not all the trust ports are involved, and there are more than 100 of them. The controversy arises because of the criteria that are set out in the Bill. The relevant sum is £5 million for compulsion and only certain ports are candidates when it comes to the Treasury stepping in at some stage—that is, if the Treasury wants to take the opportunity of compulsory sale. In any event, the Government can exercise the relevant powers after two years. The present Government will not be in


office at the end of that period and we, the next Labour Government, will be able to use the excessive powers that the Bill provides to achieve different objectives and to meet different ends. I hope that everyone is aware of that.
In debating the new clauses and amendments, we are dealing with asset stripping. How can the Government take powers to ensure that they have access to what are considered to be community assets that are locked into the special arrangements of trust ports? This is not the first Bill to deal with trusts. I recall, however, that the Treasury chose not to take any money from the Trustee Savings bank. It seems that it has changed its view, perhaps because it has seen a great deal of land value attaching to the trust ports. In effect, it is saying, "There is a great deal of land value and we could have access to the money."
That is part and parcel of the Government's privatisation policy. It has nothing to do with a ports policy or with securing a more effective arrangement for the ports. It has nothing to do with helping ports that have genuine difficulties. There are others, of course, that are more than prepared to continue as before because they have not experienced difficulties. At the same time, other ports have experienced difficulties because of trust agreements.
It has not been possible to gain access to land values for development purposes, because it is a requirement of the trust that development must be in the interest of the port. I well understand that, and it would have been possible to meet the difficulty without privatising trust ports. It would have been necessary only to introduce a harbour revision order—that has already been done in some instances. That meets the problems of gaining access to assets to enable ports to be developed in the interests of the ports. The Government have even assisted those who have chosen to take that way forward.
The Government could introduce legislation or accept that the private Bill procedure could be pursued. Perhaps our debate goes to the heart of the private Bill procedure. My hon. Friend the Member for Hartlepool (Mr. Leadbitter) has talked, naturally, about Tees and Hartlepool, and one of the purposes of the debate is to discover how much money is available. There were some who were staggered when they learned how much money was available at my hon. Friend's port. They thought that that did not matter because of capital gains tax procedures, but some fancy dancing by some fancy tax lawyers showed that the Government would not get the money by means of the capital gains tax. It was then realised that a tighter procedure would have to be used, and that is what the clause is about.
The Government are not concerned with making it easier to raise capital. They are more concerned about the Treasury getting its take. It must be said that the Government have been clear about what they want to achieve. They say that they want to reduce obstacles to the development of ports and to enable other objectives to be pursued. If possible, they would like to give preference to a management-worker buy-out. That is the Government's declared aim, although some statements of late do not encourage one to believe that that is their purpose. I was doubtful about it from the beginning, but we are aware of the Government's declared aim. That being so, I feel that they would have adopted a different formula from the one

that is before us and that which appears in the amendments to clause 16. We must consider how effective the formula will be in meeting the Government's objective of helping the ports to develop.
I cannot emphasise enough the fact that this is really about the Treasury getting more of the resources that are available. We have the declared aim to see the proper development of the ports, because of limits on asset development, but the port authorities could now face a problem in view of the formula with which they are faced.
In other words, if the local authorities or trust authorities could be sold to private companies without any money being removed, it is clear that the amount of money retained in the companies would be considerable, simply because the value of those companies would be considerable.
The consequence is that with such rich asset values, their market value would be high from the point of view of potential development, and other predators might be interested in them. That might lead those wishing to buy a port finding that the value is higher than the actual asset value. That would make it difficult for preference to be given to a management-worker buy-out, and there are many examples of cases where such proposed buy-outs have not been able to raise sufficient money to buy at the required price.
The Government wish to allow competitive tendering. In other words, it will be an auction, with those concerned making bids. The Government said in Committee that they would not necessarily accept the highest bid. Certainly there is no requirement on them to do so. Reports have appeared in various newspapers giving the view of the Secretary of State, and although I am not sure that it is the view of the Department of Transport—perhaps the Minister will make the position clear—The Guardian stated that the Department of Transport had indicated that the highest bids would almost certainly secure ownership of the ports.
Is that true? If so, have the Government changed their position on the matter? If it is true, it is important for us to delve into the issues raised by the new clause because we are speaking of the employee share ownership plan—the ESOP arrangements—and the fact that the management-employee buy-out could run into trouble trying to raise the necessary money. Others may think of higher sums, setting a higher market value than the management-worker buy-out could accomplish. Borrowing against assets is the way in which most management-employee buy-out operations work.
We are tonight discussing the question of obtaining a balance. The Government have constantly told us that we must secure a balance that will not prevent the proper development of the port. In other words, sufficient resources must remain to enable port assets to be developed, with the port developing into other spheres, having been freed from its trust requirements.
On the other hand, there is the problem of sufficient assets remaining in the port to attract others to put in a higher price, discouraging the management-worker buy-out. Unless the Government are prepared to intervene as a matter of policy to ensure that there is a management-worker buy-out, I cannot see how that balance will be achieved.

Mr. Wallace: I understood that part of the Government's objective was to try to avoid asset stripping.


Does the hon. Gentleman agree that, if there were a provision which discouraged the port—albeit the privatised port—from selling off land to a speculator at a great price, the port might be encouraged to develop that land for port purposes, rather than it being sold and used for purposes which might be unrelated, it having been sold to a third party, to the port and its development?

Mr. Prescott: The hon. Gentleman raises an important point. He will be aware that we spent a considerable time in Committee examining that issue. We are anxious to ensure that whatever development takes place, it is port related. We are concerned with asset development, but that does not come well from a Government whose primary purpose, as outlined in the clause, is to achieve asset stripping. They say that it is being done in the name of the community, and their first justification for that is the argument that they have already made many loans. Hon. Members on both sides will agree that the Port of London authority is an exceptional case in that respect, which is why the PLA is being dealt with separately in the Bill.
It is clear from the Minister's statements in Committee that the total sums paid in loans given under the various harbour revision instruments have been very small indeed. They have been nothing like the sums that are likely to be generated by the selling off of assets. In other words, this has nothing to do with getting our money back, which would be a reasonable argument for the Government to use.
This is really about getting access to the surplus value, and those are assets which the Government do not own and for which they have done nothing. This is simply a means of getting money for the Treasury. if anyone doubts that the new clause is part of a financial measure, it is clear from the drafting that we are in the realm of the tax lawyers, and in the new clause the Treasury makes that absolutely clear.

Mr. Leadbitter: The question of land, as my hon. Friend says, is important. The Bill would not protect the proposers of any buy-out from subsequently undertaking unrelated port activities, using the land to obtain quick returns and high profits, whereas port investment is long-term, gives a low rate of return and provides low profits.

Mr. Prescott: The history of port development proves that to be true. My hon. Friend knows from previous debates about ports and transport issues—and certainly from what I have said during my 21 years in the House—that we are greatly concerned about that problem. The same fears were raised during, for example, Tory Government inquiries about ports. It is clear that developments have worked to the disadvantage of ports. Indeed, one of the first debates that I attended concerned the Merseyside authority, and at that time the Selsdon man of the then Tory Government claimed we had allowed the port to go to the wall. The Government ceased saying that when they discovered that lots of old ladies had shares in pension funds invested in the Merseyside authority. So they decided that a rescue operation was necessary and that the full rigour of the market should no longer apply.
There is a legacy of problems with which we are now having to deal, and I was surprised to hear it suggested that only one shipping company had been involved in purchasing ports. In fact, there have been a number of such purchases. Sealink bought out a number of

companies. Hon. Members may recall the celebrated occasion when P and O spent most of a night pouring champagne for Tory Members in the hope that they would stay and vote at the conclusion of the proceedings. They were led into the Lobby by the then Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher).
That shows how far people will go under the private Bill procedure. It need not be done under that procedure any longer. They will simply make a bid, and it is clear that many are interested in bidding, not simply for the development of the asset land but to eliminate competition. That makes one ask whether the Monopolies and Mergers Commission procedure will apply if, for example, an owner buys a port up the road and commences to close it down. Will the Government then intervene?
That shows how important it is to have the sort of national ports council that we seek, an issue that will arise when we debate later amendments. We must preserve the existing assets to enable port-related developments to take place. My hon. Friends and I intend no criticism when we say that an amendment that we tabled on the subject has not been chosen, but I am anxious to make it clear that the issue is of great concern to us.
What proportion will the Government take? It has been said that, apart from proceeds worth 50 per cent.—we shall debate that later—we are now talking simply about the disposal of the land. The Government's original position involved their taking 50 per cent., although they amended that in Committee.

Mr. McLoughlin: rose——

Mr. Prescott: I know the point the Minister has in mind. It was 50 per cent. over 10 years, and I assure the hon. Gentleman that I am not talking simply about corporation tax. I am referring to the Government taking 50 per cent. of the proceeds, although it comes to much more than that now. I am talking only about the first share of the value, so if it is £100 million, the Government are entitled to £50 million. With 35 per cent. corporation tax on the other half, we have the figure that concerned the Minister in Committee, representing the Government having 67 per cent. of the take.

Mr. McLoughlin: Really?

Mr. Prescott: The Minister will recall the argument adduced by the hon. Member for Dover (Mr. Shaw) and other Conservative Members in Committee on an amendment that was carried and included in the Bill. They argued legitimately that it should not be more than 50 per cent. and that to take more would be exorbitant. They put forward a tapered formula which would provide a lower proportion. The amendment of the hon. Member for Dover was accepted and is expressed in the Bill as a proportion of corporation tax.
The argument in Committee was to the effect that the figures provided a take of nearly 50 per cent. The Minister put forward the counter-argument that it was about 18 per cent. less than we had calculated.

Mr. McLoughlin: rose——

Mr. Prescott: I will give way to the Minister shortly. Having suggested that it was 18 per cent. less, he thought the matter over and said that 18 per cent. was not acceptable. In the event, it is 17·9 per cent. In other words,


on the Minister's formula, to reduce it by 18 per cent. would not be acceptable but to reduce it by 17·9 per cent. makes it acceptable.

Mr. McLoughlin: Will the hon. Gentleman remind me how Opposition Members voted on the amendment that they are apparently now seeking to overturn?

Mr. Prescott: I do not want to complicate matters, especially as we have difficulty making sure that the Minister keeps to facts and figures. His concentration in these matters is not that great and his explanations are not always that clear. I have been re-reading the Official Report of our proceedings in Committee and have found myself utterly confused by his explanations.
I assure the hon. Gentleman that we are concerned with variable amounts, an issue to which I shall return. After all, the Minister is taking powers in the new clause to enable him to be variable. Is he not taking powers to vary the percentage, whatever it is? I do not know how much the figures can vary, but I do know that the Government can specify whatever percentage they want, as the Secretary of State decides. When I am Secretary of State I will be happy to exercise that judgment.
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Originally, as I said, a 67 per cent. take was envisaged. Then the hon. Members for Thurrock (Mr. Janman) and for Dover moved amendments that would have resulted in a take of just under 50 per cent. Interestingly, they argued that the Tory Government were adopting a socialist land value tax. I readily accepted that argument, thinking that I could see another use for this Bill when I get hold of it, when I will be able to vary the percentage myself. I will be able to stipulate or reject any scheme that I choose to. That is almost as good as what happened with an Industry Bill that the Tories brought in in 1974. It provided the incoming Labour Government with all sorts of powers, and I look forward to being able to use the powers given under this Bill.
I hope that those, such as the Waterfront partnership, who have advised the Government on this matter will not come and advise me—I do not want advice from them.
Now the Government have come along with another formula in which they accept that there should be a taper. The period involved is a compromise. The first part of the new clause takes the five-year period into account, but it then embraces longer periods. The percentages will vary as between the periods involved. I assume that these ideas are in line with what the industry wanted. The Opposition do not have the advantage—or disadvantage—of having the industry talk to us, a fact about which I have complained before and which I shall take into account in different cicumstances in times to come. We have had to rely on the figures before us.
Now the Government have decided that the take will be no more than 49·7 per cent., including the levy and the share of corporation tax. The British taxpayer is to be denied the extra 18 per cent. and the Government have given up their claims about returning the money to the community. I do not know what changed the Government's mind; I only know that the Minister could not carry through his ideas in Committee with the support of Conservative Members. After a few shots across their bows, the Government have given up on the 18 per cent.

The Minister said in Committee that he could not see the Government giving up the difference of 18 per cent. It seems that he has been told to do so, although the Secretary of State has scuttled off now, so we cannot find out his thinking on the matter.
The Government have come round to 50 per cent., and one of our amendments argues for 100 per cent., with the period limited to five years. The rationale behind that is that we want to prevent predators coming in. We want to let them know that all a port's value has been removed so it is no longer an attractive proposition—unless the predator merely wants to buy it up so as to close it down and eliminate competition. If the Government leave 50 per cent. of the cash value in a company and that company is sold for £100 million, there will still be enough value in it to encourage predators to buy it.
The Opposition wish to eliminate this value, although we know about the problems of removing all the cash from a port company: that may prevent the port from developing. The idea is to give the port access to the extra value, and with the five-year limitation we could rule out this problem.
This is not our formula: it is the Government's idea. We would not do any of this in the first place, but given the choice between a P and O buy-out and a managers and workers buy-out I would put my money on the latter every time. Consortiums of property companies will not have the interests of port development at heart.
This will be a better formula and it is interesting that the Government have been forced to change their minds. I hope that the Minister will tell us something about his highest bid argument and about the ESOP arrangements. Was the report in The Guardianabout selling to the highest bidder correct? It is important to know that; the trust ports need to know, and it is relevant to the possible development or selling off of the municipal port authorities, to which the local authority ratepayers have contributed. If the formula is used and the Government give the excess to the Treasury instead of keeping to a formula under which we could readily identify what goes to the local authorities, there will be real problems with these varying percentages.
In Committee, we supported the 10 per cent. amendment so as to defeat the Government—I admit that. And we did defeat them, because the Government could not justify the 50 per cent. take. We told the Government that we would give them the chance to return and justify the idea to the House, but the Minister has failed to do that. If that is because of political realities, he should admit as much. Perhaps, on the other hand, the Treasury thought that the take was too high. Or perhaps the Minister included the new formula to satisfy Conservative Members with the 50 per cent. idea, hoping later to operate the variable machinery in the new clause so that the Government could get what they wanted quietly and without controversy by order under the Bill. We need a better explanation of all these matters than we have had so far.

Mr. David Shaw: The Opposition are clearly wrong on this issue. They are obsessed with the idea of asset-strippers and speculators and do not understand the needs of modern ports facing the 21st century. Those ports want to develop their assets, especially in places such as Dover, and not only assets related to the ferry industry but


those which will broaden ports' development so as to promote tourism, for instance, to the benefit of local people.
Moreover, other ports might want to expand into non port-related activities, thereby benefiting their communities by increasing local employment. At present they are somewhat stymied in what they can do. This Bill is designed to free up assets, and over the years that will increase employment opportunities in those areas.
Those of us in Committee who tabled the amendment that I moved wanted to ensure a balance between the interests of the taxpayer—obtaining reasonable proceeds for the taxpayer—and the interests of the ports. We were worried that the original wording advanced by the Government made calculations of the levy complicated, and that the tax rate on some calculations could have exceeded 70 per cent. Moreover, the levy would have operated as a disincentive to reasonable land sales, whether in the form of management buy-outs by others who might acquire the ports later.
I congratulate the Minister on the difficult negotiations through which he has gone and on the way in which the Department of Transport has managed, under his skilful guidance, to negotiate with the Treasury a deal which, although perhaps not too beneficial to the ports, is certainly not as advantageous to the Treasury as was the original deal. The Treasury has managed to extract its pint of blood in the form of a little extra for the taxpayer. We are worried that the taxpayer might take too much out of the privatisation and that other possible acquirers of the ports might lack an incentive to buy them out. I realise that the Minister and the Treasury have a responsibility to ensure that the taxpayer receives a good share of these resources—and so he will.
My hon. Friend the Minister should be congratulated on taking our points on board. The calculation of the levy is now much easier. It is much closer to capital gains tax principles which are widely understood by business and industry. The tax rate, having been reduced below 50 per cent., is obviously acceptable and is much better than it was. The tapering principle ensures that, if management is fortunate enough to acquire the port, there will not he a massive disincentive to reasonable asset sales. If asset-strippers really do exist, which I doubt—there are more likely to be genuine operators who want to ensure that assets are properly utilized—they will suffer from the fact that, under the tapering system, the tax is higher in the earlier years and reduces in the later years.
All in all, my hon. Friend the Minister and the Government should be congratulated on getting the clause into a sensible format. We who want privatisations to be encouraged, which I think goes for all of my hon. Friends—as opposed to Opposition Members, who sought in Committee to discourage privatisation and to remove the incentives from those who work in the ports to bid for them—are pleased with what the Government have done.

Mr. Wallace: I thank the hon. Member for Middlesbrough (Mr. Bell) for his kind comments earlier on events in my constituency and for the advice that he gave me.
When this matter was debated in Committee, I was occupied elsewhere and missed the vote. As I understand it, on a recount the Government lost the Division on the amendment and they had to table new clause 9 to ameliorate the effect of clause 16.
It is difficult to work out the Government's precise intentions. I agree with much of the analysis of the Bill by the hon. Member for Kingston upon Hull, East (Mr. Prescott) and, in particular, of the objectionable parts of the Bill about the compulsory nature of privatisation and those parts which relate to the levy on the proceeds of sale. However, different considerations apply to the provisions relating to the levy on a subsequent sale of land.
Much has been made of how much the Treasury would like to get its hands on through particular provisions in the Bill. I do not doubt that that may be one of the motivating factors, but if it is to rely on the proceeds under clause 16 and new clause 9, no such economic planning could take place. There is no mention in the financial memorandum of any likely proceeds or revenue to the Treasury which might come from clause 16. That would depend on how many ports were privatised, on how many ports subsequently sold land and on whether the sale of that land would lead to a sizeable gain to which the levy would be applied. Therefore, I do not think that that is the primary concern of the new clause.
However, the new clause is an attempt to stave off the worse effects of land speculation. I well remember the privatisation of Scott Lithgow in Greenock and Port Glasgow and the Government arrangement which allowed the sale of additional land to, I think, Trafalgar House at a relatively low price. Subsequently, the land was sold at quite a premium. There was considerable outrage at the use of public funds to help the sale and at the great profits that the private sector reaped from the sale.
If the Government are trying to discourage such land speculation and the taking of land out of port development, that should be encouraged. If they are trying to achieve a balance so that at least some proceeds from the sale remain with the port, providing additional capital for port development, although that is clearly a difficult balance to strike, an honest effort has been made to strike it. I do not think that the arguments that we have heard so far from the Opposition, not least the 100 per cent. levy which at times seemed to contradict the points made earlier by the hon. Member for Kingston upon Hull, East, persuade me that that would be a better balance than the one proposed in the new clause.

Mr. McLoughlin: The hon. Member for Hartlepool (Mr. Leadbitter) was right to say that the levy could be varied with the consent of the Treasury and by affirmative order of the House. Therefore, if it were to be changed, the House would have an opportunity to take a decision on it. It could not be done without the matter coming before the House.

Mr. Leadbitter: That usually happens late at night when everyone has gone home. Let me put a simple point to the Minister, who is always anxious to reply to points made. In March 1988, the Secretary of State for Transport made clear in an address to the British Ports Federation his disappointment at the ports' reluctance to respond to his invitation to privatise. The Bill comes in the light of that reluctance. Does the Minister suggest that, in the circumstances and having regard to the levy and the little bit that would be left to the ports, the Bill benefits the Treasury or the ports?

Mr. McLoughlin: There is no doubt that the Bill will be a tremendous benefit to the ports industry in the United Kingdom. It builds on a number of changes which have taken place over some years. However, that is probably more relevant for the debate on Third Reading.
I agree partly with the points made by the hon. Member for Orkney and Shetland (Mr. Wallace). The Opposition seem to want 100 per cent. for five years, although in Committee they voted for the amendment tabled by my hon. Friend the Member for Thurrock (Mr. Janman). That would seem to be the most damaging of all, because it would delay any development in the ports for five years.

Mr. Prescott: The only trouble with that statement is that it is not in line with the facts. The hon. Gentleman knows that my hon. Friend the Member for Stoke-on-Trent, North (Ms. Walley) wrote to all the ports concerned, and they wrote back saying exactly the opposite—they did not believe that this was helpful and they did not want to be forced into such a position. If the Minister believes that, why did he not leave it to the ports to make the decision instead of being forced into privatisation?

Mr. McLoughlin: We are dealing with the levy on disposals of property after the port has been privatised; we will come later to the compulsory element.
The Government have tried to take on board the concerns which were ventilated in Committee by my hon. Friends, and that is why the concession has been made. We have tried to make far clearer exactly how and on what criteria the money will be raised. There was confusion as to whether it was capital gains on top of the 50 per cent. That is why we have tabled new clause 9, about which I wrote to the Opposition and all members of the Committee before the Easter recess.
I have explained the reasons for what the Government have done. This represents a fair response to the criticisms made by my hon. Friends. I think that the Government have got it right. It is a fair balance for the ports industry to know exactly what kind of development would come under the windfall gains. We do not want to see huge windfall gains go: that is why, for 10 years, there will be some repayment to the Government, but on a tapering basis. That is fair.

Mr. Prescott: One of the amendments to clause 16 concerns a variable application. Is it possible that, by a new order, the Secretary of State could secure more than 50 per cent., or does new clause 9 set the limit? Might one end up with a levy of more than the 50 per cent. suggested by one amendment to clause 16?

Mr. McLoughlin: No. I made perfectly clear the procedure in respect of the amendments under consideration. A change could be made, but it would have to be done by affirmative order. However, I cannot help it if particular hon. Members are not present at the relevant stage. If they feel strongly enough, they will be certain to be present. On occasions, affirmative orders have attracted a very high attendance, depending on how controversial they are.
New clause 9 strikes a fair balance between the concerns that were expressed by my hon. Friends in Committee, and I commend it to the House.

Question put, That the clause be read a Second time:—

The House divided: Ayes 224, Noes 164.

Division No. 120]
[8.20 pm


AYES


Adley, Robert
Gale, Roger


Aitken, Jonathan
Gardiner, Sir George


Alexander, Richard
Gill, Christopher


Alison, Rt Hon Michael
Gilmour, Rt Hon Sir Ian


Amos, Alan
Goodhart, Sir Philip


Arbuthnot, James
Goodlad, Alastair


Arnold, Jacques (Gravesham)
Goodson-Wickes, Dr Charles


Arnold, Sir Thomas
Gorman, Mrs Teresa


Ashby, David
Grant, Sir Anthony (CambsSW)


Aspinwall, Jack
Greenway, Harry (Ealing N)


Baker, Nicholas (Dorset N)
Greenway, John (Ryedale)


Baldry, Tony
Gregory, Conal


Batiste, Spencer
Griffiths, Peter (Portsmouth N)


Beaumont-Dark, Anthony
Grist, Ian


Beith, A. J.
Ground, Patrick


Bellingham, Henry
Hamilton, Hon Archie (Epsom)


Bellotti, David
Hamilton, Neil (Tatton)


Bendall, Vivian
Hampson, Dr Keith


Bennett, Nicholas (Pembroke)
Hannam, John


Benyon, W.
Hargreaves, A. (B'ham H'll Gr')


Bevan, David Gilroy
Hargreaves, Ken (Hyndburn)


Biffen, Rt Hon John
Harris, David


Blackburn, Dr John G.
Haselhurst, Alan


Blaker, Rt Hon Sir Peter
Hawkins, Christopher


Body, Sir Richard
Hayes, Jerry


Bonsor, Sir Nicholas
Hayhoe, Rt Hon Sir Barney


Boscawen, Hon Robert
Heathcoat-Amory, David


Bottomley, Peter
Heseltine, Rt Hon Michael


Bottomley, Mrs Virginia
Hicks, Mrs Maureen (Wolv' NE)


Bowden, Gerald (Dulwich)
Hicks, Robert (Cornwall SE)


Bowis, John
Higgins, Rt Hon Terence L.


Boyson, Rt Hon Dr Sir Rhodes
Hill, James


Brazier, Julian
Hind, Kenneth


Brown, Michael (Brigg &amp; Cl't's)
Hogg, Hon Douglas (Gr'th'm)


Browne, John (Winchester)
Howarth, Alan (Strat'd-on-A)


Bruce, Malcolm (Gordon)
Howarth, G. (Cannock &amp; B'wd)


Budgen, Nicholas
Hughes, Robert G. (Harrow W)


Burns, Simon
Hughes, Simon (Southwark)


Burt, Alistair
Hunter, Andrew


Butterfill, John
Irvine, Michael


Campbell, Menzies (Fife NE)
Irving, Sir Charles


Carlile, Alex (Mont'g)
Jack, Michael


Carlisle, John, (Luton N)
Jackson, Robert


Carlisle, Kenneth (Lincoln)
Johnson Smith, Sir Geoffrey


Carr, Michael
Jones, Gwilym (Cardiff N)


Channon, Rt Hon Paul
Jones, Robert B (Herts W)


Chope, Christopher
Kellett-Bowman, Dame Elaine


Churchill, Mr
Key, Robert


Clark, Rt Hon Alan (Plymouth)
Kilfedder, James


Clark, Rt Hon Sir William
King, Roger (B'ham N'thfield)


Colvin, Michael
Kirkhope, Timothy


Coombs, Anthony (Wyre F'rest)
Knapman, Roger


Cope, Rt Hon John
Knight, Greg (Derby North)


Cormack, Patrick
Knight, Dame Jill (Edgbaston)


Couchman, James
Knowles, Michael


Currie, Mrs Edwina
Knox, David


Davies, Q. (Stamf'd &amp; Spald'g)
Lang, Rt Hon Ian


Davis, David (Boothferry)
Lawrence, Ivan


Day, Stephen
Leigh, Edward (Gainsbor'gh)


Devlin, Tim
Lester, Jim (Broxtowe)


Dickens, Geoffrey
Livsey, Richard


Douglas-Hamilton, Lord James
Lloyd, Peter (Fareham)


Dover, Den
Lyell, Rt Hon Sir Nicholas


Dunn, Bob
McCrindle, Sir Robert


Emery, Sir Peter
Macfarlane, Sir Neil


Evennett, David
MacGregor, Rt Hon John


Fallon, Michael
MacKay, Andrew (E Berkshire)


Fearn, Ronald
Maclean, David


Field, Barry (Isle of Wight)
Maclennan, Robert


Fishburn, John Dudley
McLoughlin, Patrick


Forman, Nigel
Mans, Keith


Forsyth, Michael (Stirling)
Maples, John


Fox, Sir Marcus
Marshall, John (Hendon S)


Franks, Cecil
Martin, David (Portsmouth S)


Freeman, Roger
Maude, Hon Francis


French, Douglas
Maxwell-Hyslop, Robin


Fry, Peter
Mayhew, Rt Hon Sir Patrick






Mellor, Rt Hon David
Stanbrook, Ivor


Meyer, Sir Anthony
Stanley, Rt Hon Sir John


Michie, Mrs Ray (Arg'l &amp; Bute)
Steel, Rt Hon Sir David


Mills, lain
Steen, Anthony


Monro, Sir Hector
Stern, Michael


Montgomery, Sir Fergus
Stevens, Lewis


Moore, Rt Hon John
Stewart, Allan (Eastwood)


Morrison, Sir Charles
Stewart, Andy (Sherwood)


Newton, Rt Hon Tony
Stewart, Rt Hon Ian (Herts N)


Nicholls, Patrick
Summerson, Hugo


Nicholson, David (Taunton)
Taylor, John M (Solihull)


Nicholson, Emma (Devon West)
Taylor, Teddy (S'end E)


Norris, Steve
Temple-Morris, Peter


Paice, James
Townend, John (Bridlington)


Patnick, Irvine
Tracey, Richard


Peacock, Mrs Elizabeth
Trotter, Neville


Porter, David (Waveney)
Twinn, Dr Ian


Portillo, Michael
Waldegrave, Rt Hon William


Redwood, John
Walden, George


Rhodes James, Robert
Walker, Bill (Tside North)


Ridley, Rt Hon Nicholas
Wallace, James


Rifkind, Rt Hon Malcolm
Waller, Gary


Roe, Mrs Marion
Ward, John


Rost, Peter
Watts, John


Rumbold, Rt Hon Mrs Angela
Wells, Bowen


Ryder, Rt Hon Richard
Whitney, Ray


Sackville, Hon Tom
Widdecombe, Ann


Sainsbury, Hon Tim
Wiggin, Jerry


Shaw, David (Dover)
Wilshire, David


Shaw, Sir Giles (Pudsey)
Wood, Timothy


Shaw, Sir Michael (Scarb')
Woodcock, Dr. Mike


Shepherd, Colin (Hereford)
Young, Sir George (Acton)


Shepherd, Richard (Aldridge)
Younger, Rt Hon George


Skeet, Sir Trevor



Smith, Tim (Beaconsfield)
Tellers for the Ayes:


Speller, Tony
Mr. Sydney Chapman and Mr. Tim Boswell.


Squire, Robin





NOES


Abbott, Ms Diane
Davies, Rt Hon Denzil (Llanelli)


Adams, Mrs Irene (Paisley, N.)
Davis, Terry (B'ham Hodge H'l)


Allen, Graham
Dixon, Don


Anderson, Donald
Doran, Frank


Archer, Rt Hon Peter
Duffy, A. E. P.


Armstrong, Hilary
Dunnachie, Jimmy


Ashton, Joe
Eadie, Alexander


Barnes, Harry (Derbyshire NE)
Ewing, Mrs Margaret (Moray)


Barnes, Mrs Rosie (Greenwich)
Fatchett, Derek


Barron, Kevin
Faulds, Andrew


Battle, John
Field, Frank (Birkenhead)


Beckett, Margaret
Fisher, Mark


Bell, Stuart
Flannery, Martin


Benn, Rt Hon Tony
Flynn, Paul


Bennett, A. F. (D'nt'n &amp; R'dish)
Foot, Rt Hon Michael


Benton, Joseph
Foster, Derek


Bidwell, Sydney
Foulkes, George


Blair, Tony
Fraser, John


Boateng, Paul
Fyfe, Maria


Bradley, Keith
Galloway, George


Bray, Dr Jeremy
Garrett, John (Norwich South)


Brown, Gordon (D'mline E)
George, Bruce


Brown, Nicholas (Newcastle E)
Gordon, Mildred


Buckley, George J.
Grant, Bernie (Tottenham)


Caborn, Richard
Griffiths, Nigel (Edinburgh S)


Callaghan, Jim
Griffiths, Win (Bridgend)


Campbell, Ron (Blyth Valley)
Grocott, Bruce


Campbell-Savours, D. N.
Hain, Peter


Canavan, Dennis
Heal, Mrs Sylvia


Clark, Dr David (S Shields)
Healey, Rt Hon Denis


Clarke, Tom (Monklands W)
Henderson, Doug


Clelland, David
Hoey, Ms Kate (Vauxhall)


Cohen, Harry
Hogg, N. (C'nauld &amp; Kilsyth)


Corbett, Robin
Home Robertson, John


Cousins, Jim
Hood, Jimmy


Crowther, Stan
Howarth, George (Knowsley N)


Cryer, Bob
Howells, Dr. Kim (Pontypridd)


Cummings, John
Hughes, John (Coventry NE)


Cunliffe, Lawrence
Hughes, Robert (Aberdeen N)


Dalyell, Tarn
Jones, leuan (Ynys Môn)


Darling, Alistair
Jones, Martyn (Clwyd S W)





Kaufman, Rt Hon Gerald
Primarolo, Dawn


Lamond, James
Quin, Ms Joyce


Leadbitter, Ted
Radice, Giles


Lestor, Joan (Eccles)
Randall, Stuart


Lewis, Terry
Rees, Rt Hon Merlyn


Livingstone, Ken
Reid, Dr John


Lloyd, Tony (Stretford)
Richardson, Jo


Lofthouse, Geoffrey
Robertson, George


Loyden, Eddie
Robinson, Geoffrey


McAllion, John
Rogers, Allan


McAvoy, Thomas
Rooney, Terence


McCartney, Ian
Rowlands, Ted


McKay, Allen (Barnsley West)
Ruddock, Joan


McKelvey, William
Salmond, Alex


McLeish, Henry
Sedgemore, Brian


McMaster, Gordon
Sheerman, Barry


McWilliam, John
Sheldon, Rt Hon Robert


Madden, Max
Short, Clare


Mahon, Mrs Alice
Skinner, Dennis


Marshall, David (Shettleston)
Smith, Andrew (Oxford E)


Marshall, Jim (Leicester S)
Smith, C. (Isl'ton &amp; F'bury)


Martlew, Eric
Spearing, Nigel


Maxton, John
Steinberg, Gerry


Meacher, Michael
Strang, Gavin


Meale, Alan
Straw, Jack


Michael, Alun
Turner, Dennis


Michie, Bill (Sheffield Heeley)
Vaz, Keith


Mitchell, Austin (G't Grimsby)
Walley, Joan


Morgan, Rhodri
Warden, Gareth (Gower)


Morley, Elliot
Watson, Mike (Glasgow, C)


Morris, Rt Hon A. (W'shawe)
Welsh, Andrew (Angus E)


Morris, Rt Hon J. (Aberavon)
Welsh, Michael (Doncaster N)


Mullin, Chris
Wigley, Dafydd


Murphy, Paul
Williams, Rt Hon Alan


Nellist, Dave
Williams, Alan W. (Carm'then)


O'Brien, William
Wilson, Brian


O'Hara, Edward
Winnick, David


O'Neill, Martin
Wise, Mrs Audrey


Patchett, Terry
Worthington, Tony


Pendry, Tom



Pike, Peter L.
Tellers for the Noes:


Powell, Ray (Ogmore)
Mr. Frank Haynes and Mrs. Llin Golding.


Prescott, John

Question accordingly agreed to.

Clause read a Second time, and added to the Bill.

New Clause 13

CONSULTATIVE MACHINERY

`(1) There shall be established, within twelve months of this section coming into effect, a National Ports Council, which shall consist of representatives of Government, port authorities or where appropriate their successor companies, local authorities covering the areas in which ports are located, and workers in ports, and of individuals with relevant experience and expertise in the industry, according to a scheme of appointment to be approved by the Secretary of State.

(2) The Council shall be consulted on the exercise by the appropriate Minister of his powers under sections 5, 7 and 8 of this Act, and by the Secretary of State on the exercise of his powers under sections 9, 11, 12, 13, 14, 16, 19, 22, 23, 26 and 27 of this Act.—[Ms. Walley.]

Brought up, and read the First time.

Ms. Walley: I beg to move, That the clause be read a Second time.

Madam Deputy Speaker: With this it will be convenient to take the following amendments: No. 25, in clause 8, page 6, line 12, at end insert—
`(6A) The Minister shall not confirm a scheme under subsection (6) above unless he is satisfied that suitable provision has been made by the scheme for the establishment and maintenance of an advisory committee representative of users of and interests in the harbour to be consulted by the


company and empowered to advise the company upon matters apertaining to the use and management of the company's harbour undertaking.'.
No. 43, in clause 9, page 6, line 44, at end insert—
'local authority, representative trade unions and conservation bodies.'.
No. 44, in clause 11, page 8, line 25, leave out subsection (2) and insert—
'(2) The Secretary of State shall—

(i) give written reasons to the authority for rejecting the authority's scheme;
(ii) consult the authority and local authorities concerned before proposing the scheme;
(iii) allow a period of three months for modifications to be proposed to the scheme.'.


No. 69, in clause 19, page 15, line 43, at end insert—
'and users of that part of the Port to be designated as the Port of Tilbury'.

Ms. Walley: The important aspect of the new clause is that we feel that it is important that there should be a national ports council. The new clause provides that
representatives of Government, port authorities … successor companies, local authorities … workers in ports, and … individuals with relevant experience and expertise in the industry
would all be included in such a council, which would be there to be consulted by the Secretary of State and the Minister when they were carrying out various duties imposed on them by this legislation.
Amendment No. 43 also applies to schemes initiated by the Secretary of State. In effect, it means that, when the Secretary of State gives any direction to a relevant port authority under this section, he or she would have to consult the
local authority, representative trade unions and conservation bodies
as well as the authority. Our amendment allows for further modification of the compulsory powers contained in the legislation. Rather than the Secretary of State merely consulting the port authority concerned before preparing the scheme, we would require the authority to be sent written reasons for rejecting its scheme. We would also require full consultation, and a period of three months for modifications to be proposed.
I must express some anxiety that our amendment No. 40 has not been chosen for discussion, because that might have given us the opportunity to debate in more detail the issue of compulsion and the reserve powers that many ports are so concerned about. Judging by the comments that the Minister has just made, that will have to be an issue on Third Reading.
The House should realise that the new clause and the amendments tabled in our name get to the heart of the Bill. They set out our policies on ports, and we feel that it is important that the public should know where the Opposition stand on these issues. In case we have any further interventions similar to those at the beginning of this debate, I should add that those policies are clearly set out in our policy document.
The House should express some concern about the fact that we are told that we are dealing with a ports Bill, but, as those of us who have debated the so-called Bill in Committee realise, it is not a ports Bill but a Government con. It is all about making money for the Treasury—as my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has already demonstrated to the House—so

that it can take the proceeds of selling off more national and local assets. I hasten to add that the Government do not even own those assets.
The Bill is presented by the Secretary of State for Transport, yet, as we have already clarified, one has to search the print of the legislation thoroughly to pinpoint anything to do with transport. In stark contrast, our policy gives top priority to the development of an integrated transport system, in which ports policy would dovetail into national and local infrastructure and whereby national and local planning decisions could be made in accordance with it. It is our intention to ensure that ports, docks and waterways policies are incorporated into that. Our proposal for a national ports council, which would advise on ports policy, is a key way to bringing that about.
By contrast, the Government have introduced free market conditions of competition, with the abolition of the National Ports Council and the removal of regulations governing port development. This legislation takes us one step further down the road of determining transport policy by market forces alone.
Our national ports advisory body, as well as advising on the development of a national ports policy, would seek to reintroduce ways in which a port could be involved in investment and would require a port operating licensing system. We feel that we cannot leave important decisions about investment in our transport infrastructure to be made on the basis of market forces, and in the secrecy of commercial confidentiality. That is what is presented to us in this Bill.
Amendments Nos. 43 and 44 are just as important. Here we are dealing with a part of the Bill that seeks to compulsorily privatise trust ports that do business above the £5 million line. The intention is to privatise those ports whether or not that is what they want. That type of compulsion cannot be justified in any way. The Minister has attempted to convince the House that this is an enabling measure. If it really is an enabling measure, why is the Minister intent on forcing privatisation through the House, whether the trust ports want it or not? If he has failed to convince them that voluntary privatisation is a good thing, he should at least include further safeguards, as our amendments seeks to do.
Anybody who knows anything about trust ports, or anybody who has visited a trust port, or any hon. Member who has a trust port in his constituency knows that, while there is some support among the, trust ports for enabling legislation, there is no support whatsoever for the compulsory element that is introduced in clause 9. Our amendments provide for consultation with the local authorities and for a means of giving real reasons after a period of three months. These are methods of modifying the compulsory elements of the Bill.
From discussions that I have had about Poole harbour, I understand that the Minister has said that he is giving very careful consideration to the question of compulsion, and has reiterated his view that this is an enabling measure. Will he tell us how he proposes to proceed? If this really is an enabling measure, he ought to be able to accept our amendments. Amendments Nos. 43 and 44 would provide for the inclusion of conservation bodies, as well as incorporating local authority and trade union representatives. In Committee, we heard that the trust ports had somehow managed to preserve the balance of interests of


all the organisations using them. Our amendments would ensure that, in the context of the compulsory aspect of privatisation, some regard had to be paid to those bodies.
By way of amendment No. 40, we could have sought to ensure that, on environmental and other grounds, certain trust ports would not be caught by the net of privatisation. That issue will now have to be dealt with on Third Reading. It is absolutely crucial that an authority whose scheme has been rejected he given written reasons. There should be proper consultation, not just with the port authority but with all local authorities, before a scheme is proposed. There should be a period for modifications to be proposed. In that regard, these are reasonable amendments.
I want to refer again to a point that was put to me very forcefully by representatives from Poole. The Minister has told them that this is an enabling measure, but it is not. I understand that there will shortly be a debate in Dorset—near Poole—and that many people will speak against privatisation. So far, however, it has not been possible—in Poole, of all places—to find one person to make the Government's case. If that is so, the Minister should at least see the virtue of these very reasonable amendments. They would provide for further consultation prior to compulsory privatisation. I commend them to the House.

Mr. Jerry Wiggin: I should like to draw the attention of the House to amendment No. 25, which stands in the name of my hon. Friend the Member for Gosport (Mr. Viggers). My hon. Friend tabled a number of amendments, the general purpose of which is to draw the attention of the House to the interests of the recreational users of harbours. He apologises sincerely for his absence tonight. He had a very long-standing engagement, and I am sure that hon. Members will understand his difficulty.
Perhaps I should declare an interest. First, I am a parliamentary adviser to the British Marine Industries Federation, which, in fact, has nothing to do with this amendment. Secondly, one of my more esoteric posts is Admiral of the House of Commons Yacht Club. We have a very close relationship with the Royal Yachting Association, which has been instrumental in requesting that the point of view of recreational users be taken into account. I accept that, in the trust ports concerned—with the possible exception of Poole—the interest of the recreational user is likely to be very modest.
My hon. Friend the Member for Poole (Mr. Ward) will move amendments at a later stage. No doubt he will refer to this matter, so I will not dwell on it. At present, the recreational interests have a representative on the appropriate body, and in some cases the Royal Yachting Association actually nominates that person. Under this Bill, there is no provision for such interests to be giver any consideration at all.
I am sure that the Minister, having considered our amendments, appreciates that it would be unreasonable to expect the ordinary person who simply wants to use the local waters for recreational purposes to be subjected to the totally material, although perfectly legitimate, interests of the commercial management of a new trust port. There was an unfortunate time when one harbourmaster took the view that all pleasure boats should be excluded. For that purpose, fees and machinery that were unreasonable,

albeit within the law, were introduced. Happily, the matter has been resolved, but there is naturally concern that such a situation could arise again.
I realise that that is not the intention of this Bill, but I hope that the Minister will be able to assure the House that he will not forget the interests of the users of small boats. Their recreation provides massive employment, and many people at all levels derive much pleasure from it. The purpose of the amendment is simply to draw attention to this matter, and to ensure that the vast commercial machinery that is about to swing into operation will not result in the little local man being forgotten.

Mr. Wallace: These amendments give us another opportunity to explore the criteria that will underlie the Secretary of State's decision on which ports should be privatised. The Minister will recall that this matter was raised several times in Committee. At no time was he able to produce a list of criteria. At no time was he able to give the Committee any inkling as to the matters that would be taken into account—other than the threshold of £5 million, which is stated in the Bill.
But the amendments give us an opportunity to raise other matters too. Although the new clause does not refer specifically to port users, that point is covered by amendment No. 25, and will no doubt be referred to by those who have experience and expertise in the industry. That is important to port users.
Concern has been expressed that privatisation might mean that individual ports would fall into private hands and that that could result in the creation of a monopoly. If a shipping company that was a regular user of a port sought to become its owner, it could use its position to discriminate against other port users and further its own ends. It could exclude rather than promote competition, which is one of the objectives of the Bill. It could also lead to the concentration of an excessive number of ports in a limited number of hands. Associated British Ports may already be eyeing up some of the ports that may be privatised.
The Government ought to take account of the position of port users and of the fears that have been expressed about the threat to competition. How does the Minister intend to protect the interests of those who might be termed captive port users after privatisation? Has he managed to flesh out what he said in Committee—that he would look into the procedures to be followed when the proposed charges are thought to be unreasonably high? Objections can already be made under existing legislation, but in Committee the Minister said that he would re-examine the procedures. I hope that he will tell the House whether he has been able to do so and what he intends to do about them.
Privatisation could lead to takeovers and monopolies. The General Council of British Shipping says that an analogy could be drawn with the bus industry, where deregulation led to a spate of takeovers and mergers. Efforts were made to resist them, but the Monopolies and Mergers Commission's view was that, as takeovers and mergers had not taken place in a substantial part of the United Kingdom, it did not have the power to consider their possible consequences.
If it appears that a privatised port may be owned by a single large company, which would result in a monopoly and the restriction of competition, will either the Secretary of State for Transport or the Department of Trade and


Industry be able to refer the matter to the Director General of Fair Trading or the Monopolies and Mergers Commission? It is important that port users should have an answer to that question. The Government have not yet given them any assurances on how they intend to deal with potential monopolies. I therefore hope that the Minister will address their concerns.

Mr. Ronnie Campbell: I was disappointed not to be a member of the Committee that considered the Bill. Unfortunately, I was press-ganged on to a Standing Committee that considered the London Underground Bill. I should have loved to be a member of the Committee that considered this Bill; I take a great interest in ports, since my constituency contains Blyth port, which comes within the £5 million to £6 million bracket.
After the Bill was introduced, I met many people who said that they did not want Blyth port to be privatised. There was talk of a management buy-out, but that is another matter. The Minister has paid no attention to the amendments or to the pleas that have been made on behalf of the ports, and I do not think that we shall get very much out of him this evening.
Blyth port employs 2,000 people, but it is on the borderline when it comes to the £5 million or £6 million level. The Minister therefore ought to provide conciliation procedures for little ports before they are privatised. Larger ports may probably buy into little ports such as Blyth and Poole, strip them and take away all their facilities, such as their roll-on/roll-off vessels. That would result in the death of little ports such as Blyth and Poole. The jobs that they provide would die with them.
Blyth is unique in many senses. It has been run efficiently for many years. If, however, a successor company comes in after privatisation and takes away its facilities, its profitability will die. It costs £2 million each year just to dredge Blyth harbour. I have said before that I believe that Tees and Hartlepool port authority will want to buy Blyth and strip it of all its facilities. The port of Blyth owns a great deal of land, which would be sold off to the highest bidder—most probably to a development company that would build yuppie houses on the river banks. That would lead to the loss of 2,000 jobs. The port authority told me tonight that it will have to buy a new dredger; the old one is nearly kaput. A new dredger would cost about £1 million.
I beg the Minister to consult those port authorities that are on the borderline and give them the chance to run the harbours in the way they have always been run, rather than to rip them off. I ask him to let local people have a say in running Blyth harbour, which has created many jobs. Blyth has proved that. I hope that the Minister will consider ports such as Blyth, which are on the borderline and should not be privatised.

Mr. Barry Field: I support amendment No. 25. Especially in the Solent area, my experience has been that the main concern of yachtsmen is not whether there is an advisory committee. Most harbourmasters are mindful of the need to liaise with their local port users, whether commercial fishermen, yachtsmen or the shipping fraternity at large. Yachtsmen are concerned mainly about

the high cost of mooring fees, especially in marinas that have been purchased by a company that has established a monopoly.
I want to follow the point made by the hon. Member for Orkney and Shetland (Mr. Wallace). I suspect that my hon. Friend the Minister will tell the House that those matters are not referable to the Monopolies and Mergers Commission because they do not come under the Fair Trading Act 1973. My hon. Friend the Member for Gosport (Mr. Viggers) tabled new clause 7, which was not selected for debate this evening, and I added my name to it. I was not surprised that it was not selected for debate, because it goes beyond the ambit of the Bill.
We have a difficulty. Although amendment No. 25 makes a fair and reasonable attempt to deal with the problem in which not only yachtmen, but the pleasure boat industry and the marine industry generally have found themselves, the need for it would be removed if the Office of Fair Trading could look at such matters.
The Bill has a fairly narrow purpose. I hope that, with his shipping hat on, my hon. Friend the Minister, who effectively deals with all matters aquatic, may yet be persuaded to encourage our hon. Friends at the Department of Trade and Industry to extend legislation into the sensitive area because of the concern that is felt.
I believe that I am correct in saying that, in putting that point of view to the House, I have the full backing of all yachting interests, and especially of the Royal Yachting Association, which has grown increasingly concerned about the monopoly in the ownership of marinas, especially along the south coast.

9 pm

Mr. McLoughlin: A number of points have been raised in the debate. I shall respond briefly to my hon. Friend the Member for Isle of Wight (Mr. Field) in saying that I understand that it is possible for the matters that he raised to be referred to the Monopolies and Mergers Commission. However, they need to be referred by my right hon. Friend the Secretary of State for Trade and Industry, because they are part of his responsibility. I hope that that clarifies my hon. Friend's point.

Mr. Barry Field: That is a helpful answer, which will be most useful.

Mr. McLoughlin: I hope that I have helped my hon. Friend in his search for clarification. My hon. Friend successfully helped the General Council of British Shipping, so he knows that there is a way in which a challenge can be made to harbour charges.
My answer also partly deals with the question raised by the hon. Member for Orkney and Shetland (Mr. Wallace). I said in Committee that I wanted to consider his worry. To progress further, we may need additional legislation and I shall consider that in the light of events. If the problem is serious and there is a necessity to ease the procedure, I may need to consider the matter in due course. We want to keep it under close attention.
I know that the hon. Member for Blyth Valley (Mr. Campbell) was unable to be a member of the Committee, and that he followed the Committee proceedings with interest and concern. I hope that I can give him some reassurance. The Bill does not say that the port of Blyth must be privatised. The Bill is specific. If the Government intended that all ports with a turnover of more than


£5 million were to be privatised, the Bill would say that; it does not. The Bill gives the Secretary of Stale for Transport the right after two years to compel ports with a turnover of more than £5 million to come forward with a scheme, and he will do that after consulting the local port authority.
The hon. Member for Blyth Valley asked for consultation. I can assure him that a provision for consultation is included in the Bill and that consultation will happen. I do not expect him to say now that he welcomes the Bill, but I hope that I have allayed some of the fears that he rightly expressed on behalf of his harbour authority. That point is an important provision in the Bill. We should want discussions in great detail with all the harbour authorities that had not privatised their operations after two years on why they had not privatised them and whether privatisation might be the best course. I hope that with those words, I can give some reassurance to the hon. Gentleman.

Mr. Prescott: Is not the Minister telling the House that the Government are one of the main beneficiaries of what they judge to be the best scheme for that port? All he is actually saying is that the Government will spend a little time consulting the authority but, if the Government do not agree with the scheme brought before them, as required, within those two years, they can impose their own system. They have the main advantage and incentive because they want the money. How can there be any independent assessment in a consultation procedure of that kind?

Mr. McLoughlin: Try as I may to convince the Opposition, I do not expect to do so at this late stage. That is not the sole intention of the Bill. It is not intended to be a money-raising Bill for the Treasury. If that were the case, there would be a 100 per cent. levy and a 100 per cent. clawback levy on any period thereafter.
I must admit that I cannot find any agreement with new clause 13. It would provide for the establishment within one year of enactment of a national ports council consisting of representatives of the Government, port authorities or their successor companies, local authorities, port workers and what I can only describe as miscellaneous experts. It seems to me that the Opposition would want every single body to have representation. Opposition Members were attacking my right hon. Friend the Prime Minister this afternoon for supposedly setting up quangos, yet they seem to be tabling new clauses that would do exactly that. There is little that I want or need to say about the so-called national ports council. I do not think that my hon. Friends will find very much to commend it and I hope that, if the Opposition seek to press the new clause to a vote, it will be rejected.
Some people seek to establish organisations or bodies to get things done. The Opposition, by contrast, seek to establish them to get things delayed. That is exactly what new clause 13 would do. That is the way to pay twice over to go nowhere—once the cost of the delays and once the cost of the body that caused them. That may seem acceptable to the Opposition but it does not seem acceptable to me, and I strongly urge the rejection of what we believe to be a very unconstructive amendment.
I must also ask hon. Members to reject amendment No. 43, as they rightly did when it first appeared in Committee. I think that it is unnecessary. I recognise, of course, that

the bodies mentioned in the amendment may have views on the privatisation of the port. That is precisely why they will have an opportunity to make representations to the Secretary of State once the authority has submitted its scheme, quite apart from the fact that the Government have tabled amendments making the order confirming a scheme of this sort subject to affirmative resolution. That was one of the commitments that I gave in Committee and which was welcomed by the Opposition, the British Ports Federation and, generally, by the trust ports themselves.
Finally in this group, amendment No. 44, another old friend, covers much the same ground as amendment No. 43, except that it relates to the situation, which is likely to be rare, in which the Secretary of State is obliged to propose his own scheme of privatisation. This amendment adds relatively little to the provision in the subsection that it is designed to replace, and which provides for the Secretary of State to consult the port authority before preparing his own scheme. It is obvious that, in so doing, he would provide it with reasons why he was unable to accept its scheme and, if the authority was able to propose relevant modifications, the Secretary of State would clearly wish to consider those before starting the laborious task of preparing his own scheme. The amendment has little real purpose except to build in delay through requiring consultation with interests that will, in any event, be able to make representations to the Secretary of State once he has prepared the scheme.
It was interesting to hear what the hon. Member for Stoke-on-Trent, North (Ms. Walley) had to say about that policy, because she mentioned the Labour party candidate for Thurrock. On many occasions she has been very careful not to dissociate herself from the things that he says. I will quote from a recent article in Tideway when the hon. Lady went to Tilbury not so very long ago——

Mr. Prescott: Has the Minister been there?

Mr. McLoughlin: Yes, of course I have been there. I have been on a number of port visits, and I know that the hon. Lady has tried to do the same during the Bill's progress. When I went there, the people I met were very keen to see privatisation and to take part in it.

Ms. Walley: The Minister says that the workers favour privatisation, but is he confusing that idea with their approval for an employee-management share ownership scheme? Those two things are not the same. A work force may be wholly in favour of such a scheme in the event of privatisation, but may not otherwise favour privatisation.

Mr. McLoughlin: I disagree entirely. Work forces may want a management-employee buy-out, and I wish them success, but they are keen on privatisation per se, too. They have seen the advantages that it has brought to many other ports, and also the benefits that have resulted from the abolition of the dock labour scheme. That has put Tilbury in the happy position of being able to compete effectively with ports in neighbouring areas.
The Labour candidate for Thurrock said:
If, unhappily, the port is sold before the general election, the next Labour Government will introduce public control of Tilbury and other ports.
That is the idea behind the new clause.

Mr. Barry Porter: Has my hon. Friend heard the story that, when the hon. Member for Stoke-on-Trent, North (Ms. Walley) went round Tilbury, a senior docker——

Mr. Deputy Speaker (Mr. Harold Walker): Order. The new clause is about consultative machinery. I hope that we can return to discussing that subject.

Mr. McLoughlin: I have tried to show that the consultative machinery would be a way of delaying privatisation. The Opposition see it as a way of retaining control. I am sure that my hon. Friends will have no truck with it and will reject the new clause.

Mr. Prescott: The name of Mr. MacKinley has cropped up constantly throughout the debate. I do not wish to repeat the mistake of monitoring whether that person may be in the building, but he has probably spent more time here while we have been discussing the port than has the hon. Member whose constituency is involved. That is a matter of record.
The issue behind the amendments is the right of appeal. If one does not like the idea of a national ports council, one can dismiss it.
As for local or national representation, I thought that citizenship rights were the mode of the moment. The Tories insist left, right and centre on the individual's right to claim protection from excessive use of power by the state—or, as it would be in this case, the harbour authority. That is a proper argument, and through the amendments we suggest that there is a need for an independent body, which we have called the national ports council. Similar recommendations have emerged repeatedly from inquiries into the ports industry. Some have argued for a national ports authority, but we suggest a national ports council, because that was the last body that the Government abolished in the early stages of the development of their plans for the ports. We argued against that abolition, and the arguments that we used then are relevant to the present debate.
We have been talking about the problems of compulsion. Judgments have to be made, and there will be disagreements between the ports authorities—at present, those are the trust boards—and the Government. They may have different ideas of how the scheme should turn out, and it will be an area of dispute between them. We cannot rely on the Government to be independent in this matter. They are the main beneficiary of the scheme, so they have a vested interest in getting the best price. They cannot be the sort of independent body that one would wish to see in such circumstances. That was one of the reasons which led to a national ports council.
Different groups involved with a port may gain control of the port authority—for example, yachting interests in a marina or in the Merseyside port, where the users take control. Any user of the port has a vested interest in keeping the prices down and not spending a great deal of money to develop the port. There are many examples of that. Often, it is not in the interests of the port or the communities that depend on it to allow a single group to dominate. The amendment seeks to create the possibility of an appeal against a decision affecting a port.
Another possible dispute was mentioned in the debate. Charges are extremely controversial in a port. The fishing or yachting community may feel that the charges imposed exploit the position or are against their interest. They need

a means to appeal against them. The National Ports Council was the original body to which appeals could be made. Now the appeal has to be made directly to the Secretary of State. The Secretary of State has a vested interest in the disposal of the ports. That does not give me any confidence that the new body will be independent.

Mr. Barry Field: The hon. Gentleman has not done his homework. I was instrumental in persuading the General Council of British Shipping to take the first appeal to the Secretary of State. The Secretary of State found in my favour. How could that not be an independent decision?

Mr. Prescott: Perhaps it has not dawned on the hon. Gentleman that the Secretary of State, in the name of the Government or in any case the Treasury, will take the proceeds of the sales. The Secretary of State clearly has an interest. In the matter to which the hon. Gentleman referred, the Secretary of State was clearly independent. He had no interest in it, whatever the final outcome. It was a dispute between two parties about charges. In the matters dealt with by the Bill, the Secretary of State will clearly have a vested interest in matters of controversy.
No one can be satisfied that a dispute about prices will be dealt with impartially. Prices at ports very much affect the asset value of a port, the estimated revenue and other matters that we have discussed. Without wishing to stray, a good example of that is that, if one has tough price controls, it is difficult to sell at a good price on the market. We saw that with gas and electricity. One has to create balances. The Secretary of State will make the judgments.
The National Ports Council would be relevant where there was an element of user-domination. There might be a dispute about proper representation on the port authority. There are hundreds of trust ports and the procedures that lead to the nomination of those who sit on the boards are medieval. It is impossible to change the procedures. Bridlington is not in my constituency, but I have had constant complaints that the people who use the port cannot get the majority interest on the board. Seats on the board are handed down from one person to another as in freemasonry. Those people then decide who shall have access to the port.
I remember a diving company complaining to me that it wanted to do salvage work off Bridlington but could not get access to the port. I had no interest whatever in the company. The port had made a judgment that it wanted yachts in the port because they were more in keeping with the port. But it was a commercial port with fishing, yachting, diving and other activities. Perhaps the harbour could not take all the ships and could not cope with the demand on it. A dispute arose. In such disputes there should be a body to which such disputes can be referred for a judgment to be made. That is a legitimate argument. Such a body could function at either the local or national level. There is an argument for it to operate at local level. However, a national body could link infrastructure investment between ports.
Ports are an important part of our investment and development. The Government can have a view. Both Labour and Tory Governments pursued the arguments about roads to the ports. Often, they built the roads to the ports and the shipowner decided to move to some other area, where roads had not been built to the port. The ports


with the roads did not have the traffic and the ports without roads demanded that we invest in road infrastructure again. That is a duplication of investment.
Ports are often played by the shipowners. The port of Bristol is a classic example. It demanded and required more and more investment in containerisation. Shipowners then did not offer the port contracts. Shipowners hake mobile assets and can play one port off against another. The result is that the facilities are duplicated. That is an expensive way of dealing with port development. There is a great deal of evidence of that.
In all other European countries there is some form of national ports council or authority. Whether the Government are on the left or the right, they see the need to ensure that the communities' interests are guarded in one way or another. The matter cannot simply be left to market forces. We have a similar argument about competition. The Minister said that we should be reassured that any monopolistic tendencies or uncompetitive practices would be referred by the Department of Trade and Industry to the Monopolies and Mergers Commission. That is the case under the monopoly legislation at present.
I recall the case of the buses in either Portsmouth or Southampton, which the Department of Trade and Industry referred to the Monopolies and Mergers Association. The Monopolies and Mergers Commission considered whether the company, having purchased another company, could provide a service in the public interest, because that is at the heart of the monopoly legislation. The MMC found that it could, but the then Secretary of State ruled against the MMC because he wanted more competition. That issue involving transport was decided not by the Secretary of State for Transport but by the Secretary of State for Trade and Industry. That is not right. Transport issues should be judged by the Department of Transport and not by another Department.
The Minister talked about user representatives making recommendations. People who use the ports, whether they be fishermen or yachtsmen, have a right to representation. The Minister should remember that he, as Minister for Shipping, and Lord Sterling told us all what we should do about the shipping industry. No one else was involved apart from the Government and the industry, through Lord Sterling.
When the Minister made recommendations about the fishing industry. he thought it right to leave out the representatives of all the bodies that should have been involved, so I find his arguments today rather odd. There has been talk about the corporate state argument. That is a good example of it.
There are many good examples. To cite a further important one, when the Government did away with the National Ports Council in legislation, we made the point that if responsibility was passed over to port authorities they might not give the Government the independent information needed for an assessment of the productivity of ports. Governments should be able to make judgments about whether ports can reach certain levels of efficiency.
Through the National Ports Council, the Government could get confidential information to enable them to judge whether ports could do better. When the private ports came together in the British Ports Federation, they did not want to give the information to the Government because it was commercial. They do not want to give information to the community, and the Minister cannot get access to it.
Any advice that could be given to the Department of Transport would be welcome. If the Minister had had more advice on the dock labour scheme, he might have been more successful in dealing with the problem of compensation, when the Government had to pay £120 million instead of the £20 million that they had estimated. Good professional advice might have been useful to those dealing with the dismantling of the dock labour scheme.
For many reasons, it would be good to have a body to advise the Government. We think that there should be such a body and that people should have representation. It would be good for the user and it would certainly be good for the country. It would result in better decisions. Therefore, I hope that the House will accept the new clause.

Mr. McLoughlin: I do not think that we will come to a meeting of minds on the new clause. No doubt the House will reflect its view shortly.
I inadvertently omitted the point made by my hon. Friend the Member for Weston-super-Mare (Mr. Wiggin) when I was summing up earlier. His point about facilities for small boats and yachts is very important. I am sure that the trust ports consult users about various aspects of their operations. No doubt the successor companies will do the same. I think that it is right that the companies should be allowed to decide on their own means of consulting their customers and others with a legitimate interest in the ports. I understand the concern expressed by my hon. Friend on various occasions. Obviously, we shall want to keep a close eye on what goes on to see if there are problems such as my hon. Friend has referred to. If problems arise, we may have to address them by other means.

Question put, That the clause be read a Second time:—

The House divided: Ayes 166, Noes 210.

Division No. 121]
[9.23 pm


AYES


Abbott, Ms Diane
Clarke, Tom (Monklands W)


Adams, Mrs Irene (Paisley, N.)
Clelland, David


Allen, Graham
Clwyd, Mrs Ann


Anderson, Donald
Cohen, Harry


Archer, Rt Hon Peter
Corbett, Robin


Armstrong, Hilary
Cousins, Jim


Ashton, Joe
Crowther, Stan


Barnes, Harry (Derbyshire NE)
Cryer, Bob


Barnes, Mrs Rosie (Greenwich)
Cummings, John


Barron, Kevin
Cunliffe, Lawrence


Battle, John
Dalyell, Tam


Beckett, Margaret
Darling, Alistair


Beith, A. J.
Davies, Rt Hon Denzil (Llanelli)


Bell, Stuart
Davis, Terry (B'ham Hodge H'l)


Bellotti, David
Dixon, Don


Benn, Rt Hon Tony
Duffy, A. E. P.


Bennett, A. F. (D'nt'n &amp; R'dish)
Eadie, Alexander


Benton, Joseph
Fatchett, Derek


Bidwell, Sydney
Faulds, Andrew


Blunkett, David
Field, Frank (Birkenhead)


Bradley, Keith
Fisher, Mark


Bray, Dr Jeremy
Flannery, Martin


Brown, Ron (Edinburgh Leith)
Flynn, Paul


Bruce, Malcolm (Gordon)
Foot, Rt Hon Michael


Buckley, George J.
Foster, Derek


Caborn, Richard
Foulkes, George


Callaghan, Jim
Fraser, John


Campbell, Menzies (Fife NE)
Fyfe, Maria


Campbell, Ron (Blyth Valley)
Galloway, George


Campbell-Savours, D. N.
Garrett, John (Norwich South)


Canavan, Dennis
George, Bruce


Carlile, Alex (Mont'g)
Golding, Mrs Llin


Clark, Dr David (S Shields)
Gordon, Mildred






Grant, Bernie (Tottenham)
Mullin, Chris


Griffiths, Nigel (Edinburgh S)
Murphy, Paul


Griffiths, Win (Bridgend)
Nellist, Dave


Grocott, Bruce
O'Brien, William


Hain, Peter
O'Hara, Edward


Harman, Ms Harriet
Patchett, Terry


Haynes, Frank
Pendry, Tom


Heal, Mrs Sylvia
Pike, Peter L.


Healey, Rt Hon Denis
Powell, Ray (Ogmore)


Henderson, Doug
Prescott, John


Hogg, N. (C'nauld &amp; Kilsyth)
Primarolo, Dawn


Home Robertson, John
Quin, Ms Joyce


Hood, Jimmy
Radice, Giles


Howarth, George (Knowsley N)
Randall, Stuart


Howells, Dr. Kim (Pontypridd)
Rees, Rt Hon Merlyn


Hughes, John (Coventry NE)
Reid, Dr John


Hughes, Robert (Aberdeen N)
Richardson, Jo


Hughes, Simon (Southwark)
Robertson, George


Illsley, Eric
Robinson, Geoffrey


Jones, leuan (Ynys Môn)
Rogers, Allan


Kaufman, Rt Hon Gerald
Rooney, Terence


Lamond, James
Rowlands, Ted


Leadbitter, Ted
Ruddock, Joan


Lestor, Joan (Eccles)
Salmond, Alex


Lewis, Terry
Sedgemore, Brian


Livingstone, Ken
Sheerman, Barry


Lloyd, Tony (Stretford)
Sheldon, Rt Hon Robert


Lofthouse, Geoffrey
Short, Clare


Loyden, Eddie
Skinner, Dennis


McAllion, John
Smith, Andrew (Oxford E)


McCartney, Ian
Smith, C. (Isl'ton &amp; F'bury)


McKay, Allen (Barnsley West)
Smith, J. P. (Vale of Glam)


McKelvey, William
Spearing, Nigel


McLeish, Henry
Steel, Rt Hon Sir David


McMaster, Gordon
Steinberg, Gerry


McWilliam, John
Straw, Jack


Madden, Max
Turner, Dennis


Mahon, Mrs Alice
Vaz, Keith


Marshall, David (Shettleston)
Wallace, James


Martlew, Eric
Walley, Joan


Maxton, John
Wardell, Gareth (Gower)


Meacher, Michael
Watson, Mike (Glasgow, C)


Meale, Alan
Welsh, Michael (Doncaster N)


Michael, Alun
Williams, Rt Hon Alan


Michie, Bill (Sheffield Heeley)
Wilson, Brian


Michie, Mrs Ray (Arg'l &amp; Bute)
Winnick, David


Mitchell, Austin (G't Grimsby)
Wise, Mrs Audrey


Morgan, Rhodri
Worthington, Tony


Morley, Elliot



Morris, Rt Hon A. (W'shawe)
Tellers for the Ayes:


Morris, Rt Hon J. (Aberavon)
Mr. Thomas McAvoy and Mr. Jimmy Dunnachie.


Mowlam, Marjorie





NOES


Adley, Robert
Bottomley, Mrs Virginia


Alexander, Richard
Bowden, Gerald (Dulwich)


Alison, Rt Hon Michael
Bowis, John


Amos, Alan
Boyson, Rt Hon Dr Sir Rhodes


Arbuthnot, James
Brazier, Julian


Arnold, Jacques (Gravesham)
Bright, Graham


Arnold, Sir Thomas
Brown, Michael (Brigg &amp; Cl't's)


Ashby, David
Browne, John (Winchester)


Aspinwall, Jack
Budgen, Nicholas


Baker, Nicholas (Dorset N)
Burns, Simon


Baldry, Tony
Burt, Alistair


Batiste, Spencer
Butterfill, John


Bellingham, Henry
Carlisle, John, (Luton N)


Bendall, Vivian
Carlisle, Kenneth (Lincoln)


Bennett, Nicholas (Pembroke)
Carrington, Matthew


Benyon, W.
Carttiss, Michael


Beaumont-Dark, Anthony
Channon, Rt Hon Paul


Bevan, David Gilroy
Chope, Christopher


Biffen, Rt Hon John
Clark, Rt Hon Alan (Plymouth)


Blackburn, Dr John G.
Clark, Rt Hon Sir William


Blaker, Rt Hon Sir Peter
Colvin, Michael


Body, Sir Richard
Coombs, Anthony (Wyre F'rest)


Bonsor, Sir Nicholas
Cope, Rt Hon John


Boscawen, Hon Robert
Cormack, Patrick


Boswell, Tim
Couchman, James


Bottomley, Peter
Cran, James





Currie, Mrs Edwina
Lilley, Rt Hon Peter


Davies, Q. (Stamf'd &amp; Spald'g)
Lloyd, Peter (Fareham)


Davis, David (Boothferry)
Luce, Rt Hon Sir Richard


Day, Stephen
Lyell, Rt Hon Sir Nicholas


Devlin, Tim
McCrindle, Sir Robert


Dickens, Geoffrey
Macfarlane, Sir Neil


Douglas-Hamilton, Lord James
MacKay, Andrew (E Berkshire)


Dover, Den
Maclean, David


Dunn, Bob
McLoughlin, Patrick


Durant, Sir Anthony
Mans, Keith


Emery, Sir Peter
Maples, John


Evennett, David
Marshall, John (Hendon S)


Fallon, Michael
Martin, David (Portsmouth S)


Favell, Tony
Maxwell-Hyslop, Robin


Field, Barry (Isle of Wight)
Mayhew, Rt Hon Sir Patrick


Fishburn, John Dudley
Meyer, Sir Anthony


Forman, Nigel
Mills, lain


Forsyth, Michael (Stirling)
Monro, Sir Hector


Fowler, Rt Hon Sir Norman
Montgomery, Sir Fergus


Fox, Sir Marcus
Moore, Rt Hon John


Franks, Cecil
Morrison, Sir Charles


Freeman, Roger
Newton, Rt Hon Tony


French, Douglas
Nicholls, Patrick


Fry, Peter
Nicholson, David (Taunton)


Gale, Roger
Nicholson, Emma (Devon West)


Gardiner, Sir George
Norris, Steve


Gill, Christopher
Paice, James


Gilmour, Rt Hon Sir Ian
Patnick, Irvine


Goodhart, Sir Philip
Peacock, Mrs Elizabeth


Goodlad, Alastair
Porter, Barry (Wirral S)


Grant, Sir Anthony (CambsSW)
Portillo, Michael


Greenway, Harry (Ealing N)
Redwood, John


Greenway, John (Ryedale)
Rhodes James, Robert


Gregory, Conal
Riddick, Graham


Griffiths, Peter (Portsmouth N)
Rifkind, Rt Hon Malcolm


Grist, Ian
Roberts, Sir Wyn (Conwy)


Ground, Patrick
Roe, Mrs Marion


Hague, William
Rost, Peter


Hamilton, Hon Archie (Epsom)
Rumbold, Rt Hon Mrs Angela


Hamilton, Neil (Tatton)
Ryder, Rt Hon Richard


Hargreaves, A. (B'ham H'll Gr')
Sackville, Hon Tom


Hargreaves, Ken (Hyndburn)
Shaw, David (Dover)


Harris, David
Shaw, Sir Giles (Pudsey)


Haselhurst, Alan
Shaw, Sir Michael (Scarb')


Hawkins, Christopher
Shepherd, Colin (Hereford)


Hayes, Jerry
Shepherd, Richard (Aldridge)


Hayhoe, Rt Hon Sir Barney
Skeet, Sir Trevor


Heathcoat-Amory, David
Smith, Tim (Beaconsfield)


Heseltine, Rt Hon Michael
Speller, Tony


Hicks, Mrs Maureen (Wolv' NE)
Spicer, Sir Jim (Dorset W)


Hicks, Robert (Cornwall SE)
Squire, Robin


Higgins, Rt Hon Terence L.
Stanbrook, Ivor


Hill, James
Stanley, Rt Hon Sir John


Hind, Kenneth
Stern, Michael


Howarth, Alan (Strat'd-on-A)
Stevens, Lewis


Howarth, G. (Cannock &amp; B'wd)
Stewart, Allan (Eastwood)


Hughes, Robert G. (Harrow W)
Stewart, Andy (Sherwood)


Hunter, Andrew
Stewart, Rt Hon Ian (Herts N)


Irvine, Michael
Summerson, Hugo


Irving, Sir Charles
Taylor, John M (Solihull)


Jack, Michael
Taylor, Teddy (S'end E)


Jackson, Robert
Temple-Morris, Peter


Johnson Smith, Sir Geoffrey
Thorne, Neil


Jones, Gwilym (Cardiff N)
Tracey, Richard


Jones, Robert B (Herts W)
Trotter, Neville


Kellett-Bowman, Dame Elaine
Twinn, Dr Ian


Key, Robert
Viggers, Peter


Kilfedder, James
Waldegrave, Rt Hon William


King, Roger (B'ham N'thfield)
Walden, George


Kirkhope, Timothy
Walker, Bill (T'side North)


Knapman, Roger
Waller, Gary


Knight, Greg (Derby North)
Ward, John


Knight, Dame Jill (Edgbaston)
Watts, John


Knowles, Michael
Wells, Bowen


Knox, David
Whitney, Ray


Lang, Rt Hon Ian
Widdecombe, Ann


Lawrence, Ivan
Wiggin, Jerry


Leigh, Edward (Gainsbor'gh)
Wilkinson, John






Yeo, Tim
Tellers for the Noes:


Young, Sir George (Acton)
Mr. Timothy Wood and Mr. Sydney Chapman.


Younger, Rt Hon George

Question accordingly negatived.

Clause 1

FORMATION OF COMPANIES FOR PURPOSES OF TRANSFER OF CERTAIN STATUTORY PORT UNDERTAKINGS

Mr. John Ward: I beg to move amendment No. I, in page 2, line 6, at end insert—
`(f) any harbour authority which has not received any grant from public funds other than any grants under the Enterprise Scheme during a period of five years ending with the passing of this Act.'.
The amendment would exempt from compulsory privatisation any port that had not received subsidy from the taxpayer during the past five years. The House will know by now that my constituents are satisfied with the present arrangements for the management of Poole port and harbour. They do not wish to have a change of management forced on them by Government.
Apart from satisfying local people, the present harbour commissioners have not received a penny piece in direct subsidy from the Government in over 20 years. It seems wrong that they should be under threat from an action by a future Minister which would place at risk the good relationships and control of environmental conditions which are in place.
I have so far been unable to persuade the Government that the compulsion element should be removed from the Bill. The amendment would mean that only ports that have needed public subsidy in the recent past could be privatised by compulsion. The amendment would exempt ports such as Poole from compulsory privatisation, and I hope that hon. Members will support it.

Several Hon Members: rose——

Mr. Deputy Speaker: I call Mr.——

Mr. Robert Adley: I rise to support my hon. Friend the Member for Poole (Mr. Ward)——

Mr. Deputy Speaker: Order. Not calling the hon. Member by name was a temporary lapse on my part. He and I have known each other for many years. Mr. Adley.

Mr. Adley: I am sure that it is permissible, Mr. Deputy Speaker, for us to forget each other's names momentarily once every 21 years.
My hon. Friend the Member for Poole is a fellow Dorset Member who may be too modest to say that he never misses an opportunity to protect, as he sees it, the interests of his constituents and his constituency.
I should, by way of declaration of interest, point out that in a few days' time the company with which I am connected, Holiday Inn, will be signing a contract with Poole borough council to build a hotel. I say that lest any mischievous journalist thinks that I am speaking for any reason other than in support of my hon. Friend.
We Dorset Members like to stick together. Poole is undoubtedly one of the most efficient, well-run ports in Britain, and my hon. Friend made the valid point that a port which has not been in receipt of any central Government financial assistance should be entitled to have

some control over its own destiny. Even my hon. Friend, who perhaps occasionally shades his politics slightly differently from me, will not object to my saying in supporting him that the presumption in favour of privatisation regardless should always be tempered by local and national circumstances. On that basis, I hope that the Minister will pay heed to the pleas of my hon. Friend, who, I reiterate, always does so much to protect the interests of his constituents.

Mr. McLoughlin: I understand the concerns of my hon. Friends the Members for Poole (Mr. Ward) and for Christchurch (Mr. Adley), who takes a great interest in all transport matters, not least in those that we are considering tonight. My hon. Friend the Member for Poole has made many approaches to me on the subject. I visited Poole harbour with him on a day when the weather was not wonderful and was given a noisy welcome.
I have listened to the arguments put by my hon. Friend, but I am afraid that I cannot accept the amendment. My hon. Friend has shown understandable concern during the earlier stages of this Bill for the well-being of Poole harbour and its users and his views, as well as those of the harbour commissioners, about the proposed reserve power of compulsion are well known. Nevertheless, I am sure that he is at one with the Government in supporting the main purpose of the Bill, which is to enable those trust ports that wish to do so to transfer themselves to the private sector.
Unfortunately, the amendment that he has tabled to clause I would deny this benefit to a very large number of ports, simply because, for whatever reason, they are not among those that benefited from public money during the recent past. Indeed, some of the ports excluded by the provision would be precisely those that have shown the most enthusiasm for privatisation, and it would make no sense to penalise them because they have not received any grant from Government in recent years.

Mr. Spearing: I can see why, for technical reasons, the Minister feels that the amendment goes too wide. Has he any response to the excellent document sent to various hon. Members on both sides of the House? Does he agree that returning power to the people, in line with the announcements that we heard earlier today, is one of the Government's objectives? Why cannot he undertake to move, in another place, an amendment stipulating that trust ports that do not wish to be privatised will have the freedom to decline?

Mr. McLoughlin: The hon. Gentleman has perhaps missed some of our earlier deliberations on the enabling powers in the Bill, under which trust ports can propose themselves for privatisation. The Government believe that the larger trust ports should be in the private sector, but the Bill includes only a reserve power. It does not say that all trust ports will necessarily be privatized—an important distinction. As I have often said, if the Government intended to privatise all the trust ports, the Bill would say so. But the Bill recognises the differences among the many trust ports. My hon. Friend the Member for Poole speaks for Poole; the hon. Member for Orkney and Shetland (Mr. Wallace) would, I am sure, make a good case, as he saw it, for Lerwick. We cannot judge all the trust ports in the same way, which is why the Bill is drafted as it is.
For the reasons that I have explained, I cannot accept the amendment, and I hope that my hon. Friend will feel able to withdraw it.

Ms. Walley: The amendment has a great deal to commend it. We have just heard from the Minister another example of the back-pedalling that seems to be taking place on this Bill. He seems to be saying that all trust ports are equal, provided that they have a turnover of more than £5 million and regardless of what some of that £5 million has to be spent on—important dredging work, and so on. However, quite apart from the attempts that we have made to create exemptions for environmental protection or on grounds such as those offered in this amendment, the message seems to be that some ports are not as equal as others in the matter of compulsory privatisation. It seems that, if an hon. Member can make a strong enough political case and bend the ear of the Minister, he can gain assurances that the Secretary of State will not use these draconian powers in his constituency.
I am sorry that the Minister dismissed the amendment out of hand. We believe that it would clarify the issue and remove some of the trust ports from the net of compulsory privatisation by which they do not want to be caught. Sooner or later, we will be able to see exactly what the Minister's proposals are.
Like the Minister, I visited the port of Poole. It was a fine day and I suspect that my welcome was probably warmer than his. He at least had the grace to tell the House that he had a noisy welcome. It was a noisy welcome because everybody in Poole is united in the view that, however much this may be a piece of enabling legislation, they do not want is forced upon them.
9.45 pm
I understand that the chief executive, Hamish Green, will be speaking against compulsory privatisation at the debate on 15 May at Bournemouth polytechnic. I suspect that many, quite apart from the chief executive, the harbour commissioners and Poole and District Fishermen's Association and its secretary, Ray Knight, whom I met yesterday, including the environmentalists, agree wholeheartedly with the amendment.
If the Minister is not prepared to take on board, openly and honestly, the ideas behind the amendment, he should face the fact that the Government have not been able to convince the trust ports of the merits of privatisation. If he does not choose to apply the compulsory parts of the Act to them, he should at least be able to tell the House on what grounds he will be excluding certain ports. For that reason, the amendment has our support.

Amendment negatived.

Clause 2

TRANSFER OF UNDERTAKINGS

Amendments made: No. 5, in page 2, leave out line 28. No. 6, in page 2, line 30, at end insert
`; or
(c) to any liability of the authority incurred by virtue of section (Financial assistance for proposals to maximise employee participation in equity of successor companies) below in connection with any proposal for maximising participation by employees of the successor company in ownership of its equity share capital.'.—[Mr. McLoughlin.]

Clause 5

CONTROL BY APPROPRIATE MINISTER OVER EXERCISE OF AUTHORITY'S FUNCTIONS UNDER SECTIONS 3 AND 4

Amendment made: No. 7, in page 4, line 10, at end insert—
`( ) In exercising his powers under subsection (2) above the appropriate Minister shall have particular regard to the desirability of encouraging the disposal to managers or other persons employed by the successor company of the whole or a substantial part of its equity share capital.'.—[Mr. McLoughlin.]

Clause 8

SCHEMES MADE BY A RELEVANT PORT AUTHORITY

Ms. Walley: I beg to move amendment No. 60, in page 6, line 12, at end insert—
`(c) he shall require the memorandum and articles of the company to determine port activities as the main activity of that company.'.
The amendment speaks for itself. After the transfer of functions, the governing documents will be the memorandum and articles of association of the company. The Secretary of State will ultimately have power to determine the contents of the memorandum and articles. They will presumably be framed in such a way as to be attractive to people who might want to buy the shares. The objects clause in the memorandum of association determines the activities in which the company can lawfully engage and that could provide for diversification or for other activities besides port activities.
The Bill should be about transport. It should be committed to making sure that our ports can properly fit into Britain's transport infrastructure. Therefore, it is incomprehensible that, as happens now, plcs taking over the trust ports will be able to diversify to such an extent that port activities will not be the main activities at the heart of the new company. That is why we have tabled the amendment and seek to deter corporate raiders.
The Bill may free financial constraints on the ports, as the Government claim, but we believe that the ports should then be free to maintain activities and not to diversify into property development and all the worst examples of property speculation that we have seen.
The amendment would keep the essence of trust ports after privatisation. That is an issue on which we had considerable discussion in Committee. I remind the Minister that, in commenting on the Tees and Hartlepool Port Authority Bill, and on the proposals that did not complete their course in this House, the House of Lords Select Committee reported on 21 February 1991:
It is envisaged that the new company would enjoy unlimited freedom to expand its business activities into any sector and geographical area it chooses.
I emphasise the word "geographical" because right hon. and hon. Members expressed concern that a new company need not even be based in the area of the trust port that it took over.
The report went on:
It would thus be possible for the privatised authority to undertake commercial activities of which it has no experience and which are far removed from the business it knows well; namely, running a port and conserving a river. We accept that the authority intends at present only to expand into transport, distribution and warehousing services and into property development, and it has recruited expert managers in these areas. But nothing in the Bill would prevent even further diversification in the future.


The report added:
Exposing the holding company to such risks could endanger a successor company's ability to fulfil its statutory obligations and to carry on its core business of running the port. That could have a detrimental impact on local industry and the local community.>
Those few sentences make the case. Whatever may be the Government's intentions, and regardless of whether they will force privatisation on trust ports that do not want it, unless we can write into the memorandum and articles of association the direction that the port should be the company's main activity, the Bill will have even less to do with transport than it currently masquerades as having. For those reasons, I press the Minister to say whether port activities should continue to be the function of the new companies, or whether we may expect total diversification and an abandonment of ports throughout the country.

Mr. Stuart Randall: I wish to establish how the Government will use the powers contained in subsection (6), as amended by amendment No. 60, which would give the Secretary of State the authority to direct that a company's memorandum and articles of association could be changed, pending certain representations when a scheme is produced. I should like to hear the Minister's views in the context of recreational users such as yachtsmen and the owners of other pleasure boats.
From the Minister's comments in respect of the Monopolies and Mergers Commission and representations and consultations between various users and the company, I fear that everything will be left to market forces. If there is to be a change of powers and responsibilities, the fear among yachtsmen and other pleasure boat users is that there could be a serious loss of facilities.
We must rid ourselves of the misconception that all people who sail boats are rich, because that is not the case. Boating is one cif the most popular sports in Britain. It is enjoyed by millions of people and millions of boat owners. [Laughter.] The Minister laughs. That is one good reason why I hope that he will be able to answer my question.
I am worried about people on low incomes, who have boats, but who cannot afford to put them in the larger marinas and use all the facilities offered to boats moored on the fingers there. Often their boats are on loose moorings in an estuary or a large harbour. I believe that such people feel threatened by this legislation.
When a scheme is submitted by a port authority, what will be the Minister's attitude if representations are made to him about it by the Royal Yachting Association? Would he say that it was a matter for market forces, or would he use his powers to direct that the memorandum and articles of the company can be amended? Those powers do exist.
Yachtsmen arid pleasure boat users want to know what the Government's attitude will be towards their sport. Will the Minister leave it to market forces or will he have sympathy?
I am not asking the Minister to refer to specific schemes, but yachtsmen and British boat users will want to know exactly what the Government's attitude will be towards using those powers.

Mr. Barry Field: As it was a Labour Chancellor who put value added tax on yachts, and in view of the hon.

Gentleman's concern, will he tell us whether it would be Labour party policy to abolish VAT on yachts and pleasure boats?

Mr. Randall: What a silly question. I am sure that you would rule me out of order if I answered it, Mr. Deputy Speaker. I have genuine concern for people who enjoy sailing and boating, which is a healthy sport, especially for young people, and the hon. Member for Isle of Wight (Mr. Field) is insulting them. I am trying to find out whether a large number of those people will be threatened by the Government's policy. If the Government are going to leave ports to market forces, one can conclude that millions of pleasure boat users will be threatened.
When the Minister responds to the debate I look forward to hearing whether he will have sympathy or whether he will leave the matter to market forces and not use his powers to preserve an important sport and recreation.

Mr. Spearing: Although I happen to be a member of the RYA and therefore understand the remarks made by my hon. Friend the Member for Kingston upon Hull, West (Mr. Randall), I do not speak as a member but because I want to probe the Minister more closely. I fancy that he may reject the amendment because of the words "main activity" or because of the use of the adjective "main" in relation to the word "activity". I foresee a lawyers' field day discussing that.
If the Minister rejects the amendment I shall ask him to concede that hon. Members on both sides of the House are genuinely concerned about the ambit of the activities of the companies that he wishes to come into existence. If he declines the invitation of my hon. Friend the member for Kingston upon Hull, West, will he agree that some sort of clause—it may be too late for this House, but it could he included elsewhere—should be included in the Bill? It could run something like this: "It shall be a requirement of the memorandum and articles of the company that the activities of the company shall be principally those which are closely associated or closely related to port, haven or marine activities", although I admit that that is not a good immediate draft.
Surely that is what the House would expect such a company to be. One does not expect a port and harbour company suddenly to become an office organisation or to sell off land so that a marina is left as a tiny pool in the middle, even if commercial activity stops. That is a matter about which many people are concerned. We have seen how market forces operate along the Thames. Pressure is in their very nature. If the Minister is unable to accept this amendment, will he at least consider the introduction of some such provision as I have just rather badly outlined?

Mr. McLoughlin: The hon. Gentleman was right to suggest that I was unlikely to accept the amendment. The Opposition have overlooked one of the main purposes of the Bill, which is to allow trust ports to privatise themselves. They may wish to do so partly for the purpose of gaining the freedom to diversify their activities. Not long ago, I visited one of the trust ports. I shall not say which one.

It being Ten o'clock, further consideration of the Bill stood adjourned.

Ordered,
That, at this day's sitting, the Ports Bill may be proceeded with, though opposed, until any hour.—[Mr. Nicholas Baker.]

As amended (in the Standing Committee), again considered.

Question again proposed.

Mr. McLoughlin: I have just been referring to a visit that I paid to one of the trust ports. As we were passing a hanger, I was told that it had been rented out to a company. I said, "No doubt the company's activities are port-related." In fact, I did not realise that the charter requires such activities to be port-related, but there were a number of red faces around when I was told, "Possibly it ships in one or two things each year, but I do not think we could claim that its activities are totally port-related." I do not want to put such a restriction on the activities of trust ports.
Sale objectives will be agreed between the port and the appropriate Minister before the privatisation process gets under way. The Bill provides for a period of consultation. If the Royal Yachting Association, for which the hon. Member for Kingston-upon-Hull, West (Mr. Randall) spoke, has representations to make, it will want to put them forward at the appropriate time. [Interruption.] I did not intend to indicate that the hon. Gentleman was speaking for the RYA. My hon. Friend the Member for Weston-super-Mare (Mr. Wiggin) made a similar point earlier.
I am somewhat surprised that the hon. Member for Kingston-upon-Hull, West (Mr. Randall) rejected as nonsense the very telling point that was made by my hon. Friend the Member for Isle of Wight (Mr. Field). This amendment is too restrictive, and I hope that the House will reject it.

Ms. Walley: It may have escaped the Minister's notice, while he has been so busy with this Bill, that VAT has been increased to 17 per cent. Amendment No. 60 refers to the determination of port activities as the main activities of a company. Our intention is to ensure that ports that are operating effectively at present are enabled to continue to carry out their responsibilities. That should not be prevented by the takeover activities of predators. I am disappointed that the Minister has not taken on board the spirit of the amendment. I can assure him that the matter will be pursued with vigour in another place. If he has any regard for the genuine concern of people throughout the country about the state of ports in 10 years' time, the sentiments that are expressed in this amendment will have to be taken into consideration during the period of consultation to which he has referred.

Amendment negatived.

Clause 9

SCHEMES INITIATED BY THE SECRETARY OF STATE

Mr. Ward: I beg to move amendment No. 2, in page 6, line 44, at end insert:
`(6A) If, after consulting an authority as provided in subsection (6) above it appears to the Secretary of State that a direction under subsections (2) and (3) above ought not to be given to that authority, he shall not give the authority such a direction at any time within a period of five years commencing with the date on which he first so consulted the authority.'.

I had hoped that the Minister would be convinced by the strength of the argument put to him by many of my constituents that the element of compulsion should be removed completely from the Bill. That has not happened so far. As the Bill stands, should the Minister agree with local representatives not to use his compulsory powers to require them to prepare privatisation schemes, there is nothing to prevent the hon. Gentleman, or his successor, from returning to the question within weeks or months, having had a change of mind, and requiring privatisation to proceed. With such a sword of Damocles hanging over any organisation, it would be impossible for it to take sensible planning or commercial decisions, or to negotiate with financial institutions the financial arrangements that they have been prepared to make available in the past to trust ports, which would be under a continuing blight, due to the threat of such a decision being made by the Minister.
For many years the Poole harbour commissioners have successfully managed their own financial affairs. They have financed the development and improvement of the harbour without any call on Government funds. If financial institutions have no guarantee that harbour managers will continue to hold their present responsibilities, such sensible financial arrangements could come to a halt overnight. Surely no hon. Member can envisage any commercial institution working under such conditions. I hope, therefore, that the House will accept this modest amendment. It would enable at least some long-term planning—for five years—following the Minister's acceptance that privatisation is not immediately required.

Mr. Wallace: I support the amendment. I attempted to introduced a similar amendment by means of a new clause that was not selected for debate. Under my scheme a trust port could have attempted to maintain the status quo. Its effect would have been very much the same as the amendment moved so eloquently by the hon. Member for Poole (Mr. Ward). I visited Poole last week. The weather was exceptionally good. No political significance can be read into the weather that greeted me and that which greeted the Minister. One could not help but be impressed by the work of the harbour commissioners over a number of years and by the way in which they have developed Poole harbour. They have tried to maintain its special characteristics, including its environmental characteristics. That alone makes Poole a special case. I hope that the Minister will take that into account if he ever decides to exercise the powers that new clause 9 gives to him.
All the trust ports have their own characteristics. I argued on many occasions in Committee that the Lerwick harbour trust has its own particular characteristics. I refer to the way in which it has responded to the challenge of the oil industry. During the last 20 years, its income has grown from £40,000 to well over £5·5 million. It has diversified its activities and has invested in farming, a town centre car park, an industrial estate, a state-of-the-art fish processing factory and a four-star hotel that was opened by the right hon. Member for Ayr (Mr. Younger) when he was Secretary of State for Scotland.
The success of the efforts of many harbour trusts ought to be recognised. Moreover, if the Minister decides that a harbour trust need not be privatised, it should be free from the threat of privatisation for a number of years, or a brake could be applied to much-needed developments.
This is a sensible amendment. Both the hon. Member for Poole and I agree that the compulsory element is


unacceptable, but the amendment does not preclude the Government's option to go down that road. However, having decided against such a course, the Government should allow the harbour trusts to get on with the job which in many places, such as Poole and Lerwick—two ports of which I am aware—they have been doing well for the past 20 or more years.

Mr. Elliot Morley: I want to speak on the amendment because of the threat that privatisation poses to the fishing fleets around our coast, of which the hon. Member for Orkney and Shetland (Mr. Wallace) will be aware. I understand that there is a fishing fleet in Poole which is concerned about the threat from the potential privatisation of the trust ports.
I take the point made by the hon. Member for Poole (Mr. Ward). Successful ports such as Lerwick and Poole, which have put a great deal of finance into the infrastructure, and have run themselves extremely well and successfully, need reassurance such as he suggested.
I am especially concerned to put the view of the many fishermen who have written to me because they are concerned about the steps that the Government are taking. As a result of the distinct lack of a Government fishing policy, fishing fleets are under threat. They have been declining and they are often forced into corners of ports. In some cases, they are no longer the major financial contributors to the ports. They fear that, if the ports were privatised, there would be a more lucrative source of income from marinas and developers which would force traditional fishermen out of their livelihood and their traditional facilities. They support the amendment, and I ask the Minister to take their needs into account. I assure him that the fishing fleet do not support him or the Bill.

Mr. McLoughlin: I recognise the purpose behind the amendment. The hon. Member for Orkney and Shetland (Mr. Wallace) referred to the weather that I encountered in Poole. It was fairly lousy when I arrived, but it improved as the day went on.
It is important that the enactment of the Bill does not result in ports being kept in a constant state of uncertainty about possible privatisation. If, two years or more after enactment, my right hon. and learned Friend the Secretary of State enters into consultations with a port authority about possible privatisation, but decides not to direct that authority to submit a scheme of transfer, it will clearly be helpful for him to tell the port when he next proposes to review the situation, or he may decide that the circumstances of a particular port are such that the need for further consideration will not arise.
When we had a meeting yesterday with fishermen from the constituency of my hon. Friend the Member for Poole (Mr. Ward), I was struck by a point which they made vociferously. My hon. Friend has consistently pressed the Government to make various amendments to the Bill and he has made his point effectively, as I will explain. The issue is whether we should build such a proposal into the Bill. I and my right hon. and learned Friend have given a good deal of thought to this, and we have listened carefully to what my hon. Friend has said. My conclusion is that his proposal would help ports which we decide should not be pressed into privatisation when we consider their arguments and that we should incorporate such a provision into the Bill.
My hon. Friend the Member for Poole is probably used to hearing my next words. I am told that the wording of the amendment is not entirely satisfactory, but, if he will withdraw it, I will undertake that an amendment that will have the same effect will be tabled in another place.

Mr. Ward: I thank my hon. Friend for what he has said. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 10

THE ANNUAL TURNOVER REQUIREMENT FOR THE PURPOSES OF SECTION 9

Mr. Wallace: I beg to move amendment No. 54, in page 7, line 41, leave out '£5 million' and insert '£13 million'.

Mr. Deputy Speaker: With this it will he convenient to discuss the following amendments: No. 55, in page 8, line 1, leave out '£5 million' and insert '£13 million'.
No. 56, in page 8, line 3, at end insert—
'(7A) In calculating the turnover limit, for the purpose of subsections (6) and (7) above, no account shall he taken of income of the port authority which has been derived from charges for cargo handling.'.

Mr. Wallace: The amendment would replace the figure of £5 million with the figure of £13 million as the threshold beyond which the Government may exercise the powers in clauses 9, 10 and 11 to compel a privatisation. I must make it clear that the amendment does not imply that I and my right hon. and hon. Friends accept the case for compulsory privatisation, although we accept that if trust ports wish of their own free will to privatise themselves, that should be permissible. The Bill makes that far easier than a private Bill would because the private Bill procedure is cumbersome and can often thwart the intentions of the trust ports.
We object to the compulsory element in this, but, accepting that it is the Government's intention, it is only right that we probe it and find out why in the world they have put the cut-off point at £5 million. I raised the question in Committee and did not receive a proper answer. I will come on in a moment to review the one answer that the Minister gave in Committee.
10.15 pm
The reason why I have chosen £13 million as opposed to the £10 million that I mentioned in Committee is that, quite apart from the fact that it takes in a number of other ports, not least Aberdeen, it has the merit of being consistent with the point that I was trying to make in Committee. I chose £10 million and then increased it to £13 million because I was picking up the point made by the right hon. Member for Southend, West (Mr. Channon) when he was Secretary of State for Transport. On that occasion, attending a lunch at the British Ports Federation, he is reported in the federation review for April 1988 as saying the following:
We see privatisation as relevant primarily for the larger ports. We would not force the smaller ports down that road, though privatisation would not be ruled out if they wished.
Basically, that is the general intention of the Bill: that the smaller ports should not be forced down the road if they do not so wish, but that, if they do so wish, the procedure should be simplified and they should be able to do it.
On that occasion the then Secretary of State for Transport mentioned a figure of £ 10 million as the cut-off,


or threshold. [Interruption.] As the hon. Member for the Isle of Wight (Mr. Field) says from a sedentary position, I have increased that figure to take account of inflation, particularly the rampant inflation that we have had under the Conservative Government over the past three years.
We therefore have a position consistent with that taken in 1988 by the then Secretary of State for Transport and we have not yet heard from the Government why they have chosen a much lower figure. They have not given us any other indication of the criteria which they applied and we have not had any real indication of why the figure for the threshold has been pitched at £5 million rather than at £13 million.
The one possible explanation which the Minister offered the Committee was this:
The Government felt that a £5 million turnover demonstrated a level of activity at which the Secretary of State could use his reserve powers to introduce an element of compulsion."—[Official Report, Standing Committee D, 28 February 1991; c. 209.]
That does not answer the point at all; it restates in a different way what is already in the Bill.
I believe that the Minister owes it to the House and, in particular, to those trust ports that would be affected by the £5 million turnover cut-off, to say why he picked on that figure. Clearly, it is a figure of some significance; it means that ports with a turnover above £5 million become subject to central direction by the Secretary of State which would not be there if a different figure had been chosen. The ports that would be affected by this—I believe that Dundee comes into the £5 million category—are Blyth, Lerwick, Poole, Milford Haven, Aberdeen, Harwich haven and Clyde.
I ask the Minister to try to give a better explanation than he has up to now or, better still, to accept the logic and the consistency of the previous Secretary of State for Transport and apply the £10 million, allowing an element for inflation.
The other amendment in this group is No. 56, which would mean that in calculating the turnover limit no account would be taken of the income of the port authority derived from charges for cargo handling. This is the result of many of the representations made, particularly to my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), by the Blyth harbour commissioners. They point out that the Government have said on many occasions during the passage of the Bill that their aim is to create a so-called level playing field. I think that there must be more level playing fields now than there are acres of grass. We are always being told about creating level playing fields.
Many port authorities have not traditionally undertaken any cargo-handling operations. Shipping companies reserved any cargo handling activities for themselves or for private stevedoring companies. At the inception of the trust ports, many shipping companies managed to ensure that they had a continuing legal right to discharge and load their vessels, and trust port authorities therefore had different functions, many of which involved improving and managing the ports, primarily by way of river conservancy and by developing port facilities.
In time, however—not least because of the financial effect of the massive reductions in labour required, but also because of other developments in the ports—a number of ports developed handling capability, although that was not true of all of them. The port of Blyth has an annual

turnover of £5·5 million, about half of which—£2·8 million—represents cargo handling activities. Yet other ports that do not have cargo-handling functions may not reach the £5 million threshold and will therefore escape the central direction of the Secretary of State for which the Bill allows. In terms of harbour activity, and the activities to which the Minister referred in Committee, however, such ports will not be caught, whereas Blyth, a substantial 50 per cent. of whose turnover is attributable to cargo handling, will be caught. There is an important distinction to be drawn.
That is yet another example of how different harbours and different harbour trusts may wish to apply different criteria and in the absence of an alternative criterion from the Government, it is not unreasonable that the harbour trusts should draw the attention of the House to particular factors affecting their operations.
I hope that the Minister will be persuaded by my arguments and that common sense will prevail. I hope that the hon. Gentleman will accept the amendments so reasonably suggested by my hon. Friends and me.

Mr. Malcolm Bruce: I support the amendment. Like other hon. Members who represent constituencies in the north of Scotland, I have received sustained representations about the Bill, particularly from representatives of Aberdeen harbour.
I am sorry to see that the Secretary of State has left his place. To some extent, he has spoken with forked tongue on the matter. On one hand, he says that the Bill is not directly targeted at ports such as Aberdeen and that the Government have bigger ports in mind, while on the other, it has been widely reported that the Conservatives propose to include in their Scottish manifesto a pledge to sell off local authority ports in the north of Scotland. In those circumstances, assurances to the effect that Aberdeen will not face compulsory privatisation ring somewhat hollow. If tiny fishing ports are to be sold off—one wonders who will buy them—it seems unlikely that, in the long run, the Government will hang back when it comes to Aberdeen.
Whatever happens, I have no qualms about the future of Aberdeen as a port, because it provides an essential service and operates in the interests of the local community. It is a matter of considerable concern to me that the Government seem to believe that commercial accountability is the only criterion by which ports should be judged. The ports provide an essential community service. The Minister will know that the dispute affecting the fishing harbour in Aberdeen was the trigger for the legislation under which the dock labour scheme was abolished and I supported—indeed, had called for—such legislation at the time, because I felt that the port of Aberdeen was being killed off.
I do not approach the matter in a dogmatic or purely ideological manner. I am merely interested to ensure that Aberdeen has a port that best serves the interests of the local community. The Secretary of State should not be able to determine on a whim—at the stroke of a pen, and for ideological reasons—that the ownership and management of a port should be fundamentally changed. That is not a satisfactory situation. There is no guarantee that the views of the trustees or representatives of the local community will be taken into account.
Naturally, I support the amendment, because it removes such uncertainty from Aberdeen harbour authority.

Mr. Loyden: : Does the hon. Gentleman agree that one of the basic faults of the Bill is that it takes no account of the long-term location and activities of the ports and that it is based on current economic judgments which may change considerably in the years that lie ahead? No one can forecast with any certainty where trade will grow and where it will decline. Therefore, it is essential that there is a body that overlooks port location, so that such difficulties can be overcome.

Mr. Bruce: The hon. Gentleman has a point. I do not wish to detain the House, but I should stress that it is desirable to have ports with different structures of ownership and management—a diversity that creates genuine choice. I have no problem with that. However, I object to the idea that a port should be forced to change its status, not because it seems in the best interests of the long-term development of the port—that may be an appropriate decision for some local authorities—but because, for ideological reasons, the Secretary of State has decided that he does not like the way in which the port is being run, even though the port users and the local community are entirely satisfied.

Mr. Wallace: The Secretary of State appoints the members of the boards.

Mr. Bruce: As my hon. Friend the Member for Orkney and Shetland (Mr. Wallace) says, we are increasingly being run by boards appointed by the Secretary of State specifically to implement the wishes of the Secretary of State and the Government, who cannot get a political mandate in Scotland for the changes that they seek to bring about.
One is left with an unanswered question. If the Scottish Conservatives put in their manifesto a pledge to privatise all local authority ports and, as I predict, lose every parliamentary seat in which the ports are situated, will they still regard that as a mandate and disregard the clearly expressed wishes of the local community? The answer is, of course, that they will. They are not interested in local democracy or local communities. The Government are being as dogmatic as they have accused the Labour Government of being in the past. They are trying to impose an idelogical decision on a body which is currently constituted to serve the interests of the local community. Unless the Government can justify that change of use and explain why they believe that it is necessary, the House should accept the amendment. Indeed, the main thrust of the Bill should not be there in the first place.

Mr. Robert Hughes: I do not wish to detain the House long. I do not disagree with much of what the hon. Member for Gordon (Mr. Bruce) said. However, I am unaware—I admit that I have been otherwise engaged for part of the debate this evening—of any promise by the Secretary of State not to use the powers in the Bill to compel Aberdeen harbour board to seek full commercial status in the market. If he has given such a promise, it is not worth anything.
In Committee I got into trouble for quoting American presidents and vice-presidents. It was once said about the vice-presidency of the United States that it was not worth a bucket of warm spit. Any promise from this Government has exactly the same credibility. The whole thing is nonsense. There is no point in taking a reserve power to

compel a port to be privatised when it does not enter the private sector of its own volition, if one does not intend to use that power.
Without going into too much detail—given the time of the evening—the Secretary of State knows perfectly well that, apart from the local authority representatives, every member of Aberdeen harbour board is appointed by the Secretary of State for Scotland after discussion with the various user interests in the port of Aberdeen, such as the fishing industry, the oil industry, general commercial industry and general users of the port. They are all consulted and have representatives on the board nominated by the Secretary of State.
If the members of the board are unanimous about anything, it is that they do not wish the harbour to be privatised by the diktat of the Secretary of State. The members have said that they see no reason why the harbour should go into the private sector. It is doing extremely well. Its turnover is holding up. It has invested in the port out of its own revenues. Development plans for the next few years show that there is to be another £10 million of development at the port, all of which will be generated from its own income.
People may sometimes say that the arrangement between the users of the port and the harbour board is too cosy and that the revenues are used for the benefit of the users of the port. Who else should have the benefit of the money that is coming in if not the people who use the port? They are saying that they are perfectly happy to pay such reasonable harbour dues as the board may decide, provided the decisions on how the money is spent are made locally.
I have had several representations from private companies, including one only a couple of days ago, about the fact that Aberdeen harbour board might be thrust, against its will, into the private sector. They view that prospect with abhorrence and have asked me to do what I can to ensure that the good arrangements which they have at Aberdeen are not disturbed. I understand that the Minister will not withdraw the reserve clause, and that he will not drive that coach and horses through his Bill. We should disturb the trust ports as little as possible.
10.30 pm
As the hon. Member for Gordon (Mr. Bruce) has said, the idea that the local authority ports may shortly be privatised has been widely floated. I shall not attempt to go through every port north and south of Aberdeen, but we know that Aberdeen is a trust port and would be caught as the Bill stands. Fraserburgh and Peterhead are both trust ports. As I recall, they are well below the current limit and are unlikely even through inflation or by changes in trade to come up to the limit. Further round the coast are Buckie and Lossiemouth, which I understand are local authority ports. It would be nonsense for the Government to privatise Aberdeen harbour board compulsorily because it is caught by the legislation, leave Fraserburgh and Peterhead out for the moment, and sell the local authority ports.

Mr. Wallace: The hon. Gentleman should not give them ideas.

Mr. Hughes: The idea is already there. We know what the hidden agenda is. The intention is to sell everything that moves and everything that does not move because they need the money for other nefarious purposes.

Mr. Bell: I apologise for intervening in a fine speech so late in the evening, but the turnover at Peterhead is £1·5 million. We know that the Treasury is not interested in such a small sum.

Mr. Hughes: My hon. Friend is far too generous. We have to act on the supposition that the Government have a shelf life at least until June 1992. On that basis, as they scrabble around to try to get money to meet the magical figure of 20p in the pound for income tax or to find some way to bolster up the poll tax, which will still be in existence, and as they scrabble around for every financial inducement that they can use to buy votes, even a port with a turnover of £1·5 million will not escape the net, especially if they proceed to sell the local authority ports.
It does not make sense to have a patchwork of different activities along the same coastline. I know what the Government are up to. I join the hon. Members for Gordon and for Orkney and Shetland (Mr. Wallace) in an appeal for the limit to be raised. The higher it is, the better. I shall certainly support the amendment.

Mr. McLoughlin: In some ways, this has been one of the more interesting debates, if we look back at what was said in Committee. I was taken by what the hon. Member for Orkney and Shetland (Mr. Wallace) said tonight. It would probably have been better if the amendment had been moved by the hon. Member for Gordon (Mr. Bruce). In Committee, the hon. Member for Orkney and Shetland said:
 "The hon. Member for Thurrock (Mr. Janman) would reduce, through amendments Nos. 8 and 9, the threshold to £1 million. The hon. Member for Kingston upon Hull, East and his hon. Friends would increase it, through amendments Nos. 120 and 98, to £50 million.
Then he said:
I may be adopting the classic Liberal position in opting for £10 million."—[Official Report, Standing Committee D, 26 February, 1991; c. 200.]
What has happened to that classic Liberal position? The classic Liberal position just happened not to take account of Aberdeen. What the hon. Member for Orkney and Shetland probably did not know was that his hon. Friend the Member for Gordon had written to the Secretary of State to complain about the fact that Aberdeen would be included in the forced privatisation. The classic Liberal position was that one hand did not know what the other hand was doing.

Mr. Wallace: The Minister will know, if he reads a little further, that if he had accepted my amendments Nos. 105 and 199, Aberdeen would not have been affected anyway. He ignores the fact that my hon. Friend and I object, as a matter of principle, to the compulsory privatisation of Aberdeen or any threshold being inserted in the Bill. Has not the £10 million classic Liberal position been overtaken by rampant Tory inflation?

Mr. McLoughlin: That was a nice try, but I still think that we smoked out where the classic Liberal position was in that case.
A number of points have been made, but I cannot be held responsible for all the speculation that may appear in newspapers about what may be in future Conservative party manifestos. The fact that the press are more interested in Conservative party manifestos but share little interest in the Liberal party's manifesto may be because they know that we are more likely to be in a position to carry out our manifesto commitments.
This is not the first attempt to raise the threshold to £5 million. In Committee, the hon. Member for Orkney and Shetland sought to take it up to £10 million, but that could have got him into trouble with the hon. Members for Aberdeen, North (Mr. Hughes) and for Aberdeen, South (Mr. Doran), as Aberdeen would still have been included in the original amendment. At least the figure of £10 million would have had the virtue of being a round figure, whereas £13 million has, despite the Opposition's arguments, nothing to commend it and no rationale.
The hon. Member for Aberdeen North asked how we reached our decision of £5 million. As I said earlier today, and in Committee, that figure relates to the company's turnover and the likely prospects of its being successful in the private sector. The hon. Gentleman rightly pointed out that the Secretary of State, in consultation with various bodies, appoints all the members of that harbour authority. If we intended to privatise come what may, we would have another way to achieve our aims.
The clause requires companies to find out whether they would be better off in the private sector. We have accepted that there will be an affirmative resolution where we force a scheme to come forward.

Mr. Robert Hughes: As the hon. Member for Gordon (Mr. Bruce) said, we should not give the Minister ideas. However, it was always at the back of my mind that he would use the precedent that the Secretary of State for Transport used when he was Secretary of State for Scotland—he brought his cronies to the health board to do his dirty work. I would not put it past the Minister to do the same when it comes to appointing members of the harbour board.

Mr. McLoughlin: I have made it clear that the Government would like the larger trust ports to go into the private sector. When I visited Aberdeen, I was struck by the way in which the port operates and by the fact that it has characteristics that other trust ports throughout the country do not have. Trust ports are diverse.

Mr. Loyden: Is the Minister aware that the snapshot judgments that are being made purely on the question of ports' present financial positions would, two decades ago, have excluded Felixstowe from any development. How can the Government base their assessment of the future of the port transport industry on snapshot pictures taken at this stage, without having full regard to consequences that may occur in the future? I repeat that many successful ports in the United Kingdom, by the Government's criteria, would not exist today.

Mr. McLoughlin: Many successful ports are already in the private sector and have done well through being in it. Indeed, one of the reasons why Felixstowe did so well was that it was out of the constraints of the national dock labour scheme.
When we abolished the national dock labour scheme, Aberdeen was a great beneficiary. It was not opposed to it, and managed to secure much Government money via the abolition of that scheme.
The hon. Member for Orkney and Shetland has urged me to accept amendment No. 56. Ever since hon. Members have discovered that the Bill contained a turnover limit, they have been thinking of items to leave in the scheme and of others to remove from it. That comment applies especially to the hon. Member for Orkney and Shetland.


In Committee, we heard about dredging, conservation charges and fishery operations. We have been told about cargo handling receipts this evening, and perhaps the hon. Gentleman's noble Friend in another place will suggest pilotage fees at a later date. That is another part of the operation that can be tried on. They may go on to argue that every aspect of turnover should be removed from the statement of turnover.
Despite the arguments that the hon. Member for Orkney and Shetland has advanced, I see no reason why cargo handling receipts and the other normal commercial activities of many ports should not be considered elements of turnover, if the ports carry out the work themselves. We are seeking a broad measure of port authorities' operations, and it does not make sense to seek to exclude the areas of activity to which I have referred. I ask the House to reject the amendment.

Ms. Walley: I put on record the Opposition's total resistance to the compulsion provisions in the clause. There is no substitute for removing the reserve powers. If the Minister understood that, we would not be considering amendments that represent an attempt to change the formula so that we have an exclusion zone based on a turnover of £13 million rather than one of £5 million. The compulsion provisions are wrong, and they should be removed.
When the hon. Member for Poole (Mr. Ward) was speaking to amendment No. I on Poole and the five years during which there would be no further consideration of privatisation, I attempted to intervene. As the hon. Member for Poole probably had an inkling that the Minister would take on board the terms of the amendment, I think that it would have been helpful if I had had the opportunity to express our real concerns about Poole and British Petroleum's proposals for Hook island, which show that at least five years are needed if a balanced view is to be reached of what is happening, and if the concerns of the fishermen and the environmentalists are to be properly taken on board. It must be understood clearly why such important changes are going ahead.
If the Bill did not contain the element of compulsion, we would not need to start playing about with figures. The Opposition have received many representations from the trust ports to the effect that it should be left to them, the ports, to decide whether to proceed. No playing around with figures can alter those representations. The £13 million formula would clearly be preferable if it were to take some of the trust ports out of the net of compulsory privatisation. The arguments on behalf of Aberdeen have been well advaricd by my hon. Friend the Member for Aberdeen, North (Mr. Hughes). Anything that removes the compulsion provisions should be supported.

Mr. Wallace: The hon. Member for Stoke-on-Trent, North (Ms. Walley) is right: if the compulsory element were removed from the Bill, there would be no need to table amendments such as those that are before the House. Equally, there would be no need to try to devise criteria if the Government would only put before us some of their criteria. It was the opposition of my hon. Friend the Member for Gordon (Mr. Bruce) that prompted him to write to the Secretary of State to make out the case of Aberdeen, with which I entirely agree. There is no dispute between us. We are entirely opposed to the compulsion.
There is a split, however, in the Tory ranks, between a Tory Secretary of State for Transport in 1988, who said that he would not force smaller ports down the road to privatisation, and a Tory Secretary of State for Transport in 1991 who is forcing the smaller ports down that road. That is a fundamental split in Government ranks. The Minister has not explained why the figures of the former Secretary of State for Transport, the right hon. Member for Southend, West (Mr. Channon) have not been accepted, so we shall divide on the issue.

Question put, That the amendment be made:—

The House divided: Ayes 95, Noes 176.

Division No. 122]
[10.44 pm


AYES


Abbott, Ms Diane
Illsley, Eric


Adams, Mrs Irene (Paisley, N.)
Kirkwood, Archy


Barnes, Harry (Derbyshire NE)
Lamond, James


Barnes, Mrs Rosie (Greenwich)
Leadbitter, Ted


Battle, John
Lewis, Terry


Beckett, Margaret
Livingstone, Ken


Bell, Stuart
Livsey, Richard


Bellotti, David
Loyden, Eddie


Bennett, A. F. (D'nt'n &amp; R'dish)
McAvoy, Thomas


Benton, Joseph
McKay, Allen (Barnsley West)


Bermingham, Gerald
McLeish, Henry


Blunkett, David
McMaster, Gordon


Bray, Dr Jeremy
Madden, Max


Brown, Gordon (D'mline E)
Mahon, Mrs Alice


Brown, Nicholas (Newcastle E)
Marek, Dr John


Brown, Ron (Edinburgh Leith)
Marshall, David (Shettleston)


Caborn, Richard
Martlew, Eric


Campbell, Menzies (Fife NE)
Maxton, John


Campbell-Savours, D. N.
Michael, Alun


Clelland, David
Michie, Mrs Ray (Arg'l &amp; Bute)


Clwyd, Mrs Ann
Nellist, Dave


Cohen, Harry
Oakes, Rt Hon Gordon


Cousins, Jim
O'Hara, Edward


Crowther, Stan
Pike, Peter L.


Cryer, Bob
Powell, Ray (Ogmore)


Cunliffe, Lawrence
Prescott, John


Dalyell, Tarn
Primarolo, Dawn


Dixon, Don
Quin, Ms Joyce


Doran, Frank
Reid, Dr John


Dunnachie, Jimmy
Robertson, George


Fearn, Ronald
Salmond, Alex


Flynn, Paul
Short, Clare


Foulkes, George
Skinner, Dennis


Fraser, John
Spearing, Nigel


Fyfe, Maria
Steel, Rt Hon Sir David


Galloway, George
Steinberg, Gerry


George, Bruce
Taylor, Matthew (Truro)


Golding, Mrs Llin
Turner, Dennis


Gordon, Mildred
Vaz, Keith


Griffiths, Nigel (Edinburgh S)
Wallace, James


Griffiths, Win (Bridgend)
Walley, Joan


Hain, Peter
Ward, John


Haynes, Frank
Warden, Gareth (Gower)


Henderson, Doug
Williams, Alan W. (Carm'then)


Home Robertson, John
Wise, Mrs Audrey


Hood, Jimmy



Howarth, George (Knowsley N)
Tellers for the Ayes:


Hughes, John (Coventry NE)
Mr. Malcolm Bruce and Mr. Alex Carlile


Hughes, Robert (Aberdeen N)



Hughes, Simon (Southwark)





NOES


Alexander, Richard
Bennett, Nicholas (Pembroke)


Alison, Rt Hon Michael
Benyon, W.


Amos, Alan
Bevan, David Gilroy


Arbuthnot, James
Blackburn, Dr John G.


Arnold, Jacques (Gravesham)
Blaker, Rt Hon Sir Peter


Arnold, Sir Thomas
Body, Sir Richard


Ashby, David
Bonsor, Sir Nicholas


Aspinwall, Jack
Boscawen, Hon Robert


Baldry, Tony
Bottomley, Peter


Bellingham, Henry
Bottomley, Mrs Virginia






Bowden, Gerald (Dulwich)
French, Douglas


Bowis, John
Fry, Peter


Brandon-Bravo, Martin
Gale, Roger


Brazier, Julian
Gill, Christopher


Bright, Graham
Goodlad, Alastair


Brown, Michael (Brigg &amp; Cl't's)
Goodson-Wickes, Dr Charles


Browne, John (Winchester)
Gorman, Mrs Teresa


Burns, Simon
Grant, Sir Anthony (CambsSW)


Burt, Alistair
Greenway, Harry (Ealing N)


Butterfill, John
Greenway, John (Ryedale)


Carlisle, John, (Luton N)
Griffiths, Peter (Portsmouth N)


Carlisle, Kenneth (Lincoln)
Ground, Patrick


Carrington, Matthew
Hague, William


Carttiss, Michael
Hamilton, Hon Archie (Epsom)


Channon, Rt Hon Paul
Hamilton, Neil (Tatton)


Chapman, Sydney
Hannam, John


Chope, Christopher
Hargreaves, A. (B'ham H'll Gr')


Churchill, Mr
Hargreaves, Ken (Hyndburn)


Colvin, Michael
Harris, David


Coombs, Anthony (Wyre F'rest)
Hawkins, Christopher


Cope, Rt Hon John
Hayes, Jerry


Cran, James
Hayhoe, Rt Hon Sir Barney


Currie, Mrs Edwina
Heathcoat-Amory, David


Davies, Q. (Stamf'd &amp; Spald'g)
Hicks, Mrs Maureen (Wolv' NE)


Davis, David (Boothferry)
Hicks, Robert (Cornwall SE)


Day, Stephen
Hill, James


Douglas-Hamilton, Lord James
Hind, Kenneth


Dover, Den
Howarth, Alan (Strat'd-on-A)


Dunn, Bob
Howarth, G. (Cannock &amp; B'wd)


Durant, Sir Anthony
Hughes, Robert G. (Harrow W)


Emery, Sir Peter
Hunter, Andrew


Evennett, David
Irvine, Michael


Fallon, Michael
Jack, Michael


Field, Barry (Isle of Wight)
Jackson, Robert


Fishburn, John Dudley
Johnson Smith, Sir Geoffrey


Forman, Nigel
Jones, Gwilym (Cardiff N)


Forsyth, Michael (Stirling)
Jones, Robert B (Herts W)


Fowler, Rt Hon Sir Norman
Kellett-Bowman, Dame Elaine


Fox, Sir Marcus
King, Roger (B'ham N'thfield)


Franks, Cecil
Kirkhope, Timothy


Freeman, Roger
Knapman, Roger





Knight, Greg (Derby North)
Shaw, David (Dover)


Knight, Dame Jill (Edgbaston)
Shaw, Sir Michael (Scarb')


Knowles, Michael
Shepherd, Colin (Hereford)


Knox, David
Speller, Tony


Lang, Rt Hon Ian
Stanley, Rt Hon Sir John


Lawrence, Ivan
Steen, Anthony


Leigh, Edward (Gainsbor'gh)
Stern, Michael


Lester, Jim (Broxtowe)
Stevens, Lewis


Lilley, Rt Hon Peter
Stewart, Allan (Eastwood)


Lloyd, Peter (Fareham)
Stewart, Andy (Sherwood)


Luce, Rt Hon Sir Richard
Stewart, Rt Hon Ian (Herts N)


Lyell, Rt Hon Sir Nicholas
Summerson, Hugo


Macfarlane, Sir Neil
Taylor, John M (Solihull)


MacKay, Andrew (E Berkshire)
Taylor, Teddy (S'end E)


Maclean, David
Thompson, Patrick (Norwich N)


McLoughlin, Patrick
Thorne, Neil


Mans, Keith
Thornton, Malcolm


Maples, John
Townend, John (Bridlington)


Maude, Hon Francis
Tracey, Richard


Maxwell-Hyslop, Robin
Trotter, Neville


Mayhew, Rt Hon Sir Patrick
Twinn, Dr Ian


Meyer, Sir Anthony
Viggers, Peter


Mills, lain
Walden, George


Montgomery, Sir Fergus
Waller, Gary


Morrison, Sir Charles
Warren, Kenneth


Newton, Rt Hon Tony
Watts, John


Nicholls, Patrick
Wells, Bowen


Norris, Steve
Wheeler, Sir John


Paice, James
Widdecombe, Ann


Patnick, Irvine
Wiggin, Jerry


Rhodes James, Robert
Wilkinson, John


Riddick, Graham
Winterton, Mrs Ann


Rifkind, Rt Hon Malcolm
Wood, Timothy


Roberts, Sir Wyn (Conwy)
Yeo, Tim


Roe, Mrs Marion
Young, Sir George (Acton)


Rost, Peter



Rumbold, Rt Hon Mrs Angela
Tellers for the Noes:


Ryder, Rt Hon Richard
Mr. Nicholas Baker and Mr. Tim Boswell.


Sainsbury, Hon Tim

Amendment accordingly negatived

Clause 11

SCHEMES MADE BY THE SECRETARY OF STATE

Mr. Bell: I beg to move amendment No. 42, in page 9, line 26, after 'order', insert
`which shall not come into effect until it has been laid before and approved by both Houses of Parliament.'.

Mr. Deputy Speaker (Sir Paul Dean): With this it will be convenient to take the following: Amendment No. 63, in clause 22, page 18, line 17, after 'State' insert `by order'.
Amendment No. 59, in clause 32, in page 23, line 28, after 'section', insert '8(7), 11(8)'.
Government amendment No. 19, in page 23, line 30, at end insert
`(2A) No order to which this subsection applies shall be made unless a draft of the instrument containing the order has been laid before. and approved by a resolution of, each House of Parliament.
Amendment (a), in line 10, leave out `; or'.
Amendment (b), in line 11, at end add
`; or
(e) under section 22(2) above.'.
Amendment No. 75, in page 23, line 31, leave out subsection (3).
Government amendment No. 20, in page 23, line 31, leave out from `containing' to end of line 34 and insert—

`(a) an order under section 8(7) or 19(7) above other than one within paragraph (a) or (c) of subsection (2B) above; or
(b) regulations under section 24 above;'.

Amendment (d), in line 3, leave out '8(7) or'.
Amendment (e), in line 4, leave out '(a) or'.
Government amendment No. 21.
Amendment No. 76, in page 23, line 39, at end insert—
`( ) If, apart from the provisions of this subsection, the draft of an order to which subsection (2A) above applies would be treated for the purposes of the Standing Orders of either House of Parliament as a hybrid instrument it shall proceed in that House as if it were not such an instrument.'.

Mr. Bell: Amendment No. 42 reflects our concern that affirmative resolutions should be debated on the Floor of the House when we deal with the privatisation of trust ports under the Bill.
I am aware that amendment No. 42 is subsumed in Government amendment No. 19, which calls for a draft instrument containing any order to be laid before and approved by a resolution of each House of Parliament. This was discussed in a fine and constructive debate in Committee. The Government listened to the Opposition's points and agreed that it would not be right for an order to be made simply on the fiat of a Secretary of State for Transport or a Minister.
I was amused earlier when the hon. Member for Langbaurgh (Mr. Holt) asked my hon. Friend the Member for Stoke-on-Trent, North (Ms. Walley) whether the Labour party would renationalise the ports. The ports are trust ports and therefore are not nationalised, but in any event the powers in the Bill could, if they became law, be used by my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) if there were a Labour Government, and I doubt whether many ports would be privatised. Therefore, the question whether the Labour party would nationalise such ports does not require a great deal of reflection.
However, the Government listened to the arguments and accepted that they should not have an administrative fiat over the ports, and certainly not over those ports

which are compulsorily privatised. Whatever the Government say, there is no great will among British ports to be privatised. There may have been such a will when the right hon. Member for Southend, West (Mr. Channon) began the process some three years ago. He turns his head with great alacrity at the mention of his name, and I am glad that he is here because he was the Secretary of State who invited the trust ports to take the private Bill procedure of the House of Commons. Tees and Hartlepool was the first port to do so. But the actual procedure, as he envisaged it, has changed drastically in the past three years, and certainly since he left office.
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The hon. Member for Orkney and Shetland (Mr. Wallace) said that, at that time, the former Secretary of State for Transport said that there was no question of trust ports being privatised against their will. However, the right hon. Gentleman is in his place tonight to support the Government, despite the fact that they are contradicting the policy upon which he embarked three years ago. It is one of the Opposition's jobs to highlight the little ironies that arise in the Government's actions over the years.
Some ports may have seen some merit in privatisation when it was first suggested by the right hon. Member for Southend, West, as they could perceive a form of management buy-out that would keep their ports in local hands. That would—as my hon. Friend the Member for Aberdeen, North (Mr. Hughes) said—benefit the local community and users and put the existing management's expertise to good effect.
A different Bill is now before the House, and it is clear that the competitive tendering element will mean that many ports will be found not in the hands of their existing management but in those of predators of the kind that Conservative Members, including the hon. Member for Dover (Mr. Shaw), do not believe exist. If ports anticipate that they will be taken over by outside bodies, they will not take the voluntary privatisation route, and there will he coercion of the type for which the Bill makes provision. That shows the importance of this House and the other place having placed before them orders that can be the subject of debate.
In Committee, the Minister rejected at every turn our proposals for proper consultation with local authorities and trade unions, so it is proper that the House should be given an opportunity to debate affirmative resolutions. Earlier, in the debate on the levy, the Minister pointed out that such debates, which need not be held late in the evening, can be well attended.
We hope that the Government's amendment, which is supported by ours, will allow for proper debate and make the Minister accountable. However, if there is an election and a change of Government, the entire procedure will fall by the wayside. Meanwhile, the House wants an assurance that there will be proper debates on affirmative resolutions covering the variety of interests to which the Bill refers.
I commend amendment No. 42, while acknowledging that it is subsumed in Government amendment No. 19. My hon. Friend the Member for Newham, South (Mr. Spearing) has tabled amendments to amendment No. 19, and no doubt we shall hear from him on them, and from the Minister as to whether he is prepared to accept it.

Mr. Patrick Nicholls: I declare my interest, as I shall be a parliamentary adviser to Port Enterprises Ltd. with effect from 1 May.
The hon. Member for Middlesbrough (Mr. Bell) addressed a concern that I share, and, perhaps surprisingly, his conclusions are not wholly dissimilar from my own. Amendment Nos. 75 and 76, with amendments (d) and (e) to Government amendment No. 20, are in my name and that of my hon. Friend the Member for the Isle of Wight (Mr. Field). They can best be explained in this way. The Bill makes provision for a compulsory 42-day consultation period in respect of individual port privatisation schemes, with the intention of an order being tabled bringing a scheme into effect, using the negative resolution procedure. For that to happen, the order must lay for 40 parliamentary days before it is confirmed. At any time during that period it can be prayed against, which would occasion a debate in the usual way. During that process no privatisation can take place.
At first, that sounds perfectly innocuous, but on closer examination it seems clear that that would create an inordinate and unnecessary delay for those major trust ports which wish to privatise, which is an important point.
The effect of the laying of the order having to be measured in parliamentary days means, as far as I can tell, that the earliest time in which a scheme could be approved would be by 19 December 1991, and if one makes the not unreasonable assumption that a general election might intervene, it would be the end of January 1992. Obviously that would create a disturbing and damaging period of uncertainty for each of the trust ports which wanted to privatise, especially bearing in mind competitive tendering, which is quite rightly the process preferred by the Government.
Therefore, the amendments give those ports privatising themselves, using the enabling powers in clause 8 of the Bill, the ability to have the order approved by the Secretary of State without recourse to further parliamentary procedure.
The hon. Member for Middlesbrough referred to the fact that the Government will accept an amendment to clause 32 to give those ports that are being privatised compulsorily the right to an affirmative resolution procedure. I shall entirely understand if my hon. Friend the Under-Secretary chooses to make that concession. The hon. Member for Middlesbrough and I are talking about ports proceeding in different ways—on the one hand compulsorily and on the other, willingly. I do not know whether my hon. Friend will make that concession, and I could well understand the contrary argument.
As for those ports acting directly in accordance with the policy in the Bill—doing precisely what the Government want, by bringing themselves forward for privatization—it does not seem necessary for them to have to go through that parliamentary procedure.
In short, my amendments would enable those ports that want to privatise to get on with it, without even more parliamentary procedure. I hope that the Government will accept that they are within the spirit of the Bill and that the idea behind them, if not their wording, will commend them to my hon. Friends.

Mr. Spearing: I support amendment No. 42, moved by my hon. Friend the Member for Middlesbrough (Mr. Bell). I have tabled another set of amendments to the Minister's amendments that would include in this rather

dense and convoluted legislation the requirement for an affirmative resolution instrument to come before the House in regard to those parts of the Bill dealing with the port of Tilbury. I support amendment No. 42 and I hope that the Minister will accept the amendments, because I do not think that amendment No. 19, which he will no doubt press, requires an affirmative resolution instrument for the port of Tilbury.
Tilbury docks remain perhaps the most important, or the only substantial, docks in the port of London. The relationship between Parliament and the law in the development of the port of London over the ages has been significant. Therefore, it is not for the House to have the power to approve a major change—or something more than a change—in the structure of what remains of the port of London. It would be totally inappropriate.
There used to be a law which permitted cargoes to be discharged only on the legal quays, upstream and downstream of London bridge. That was opposed by dock interests, and the House passed dock Bills approving the construction of docks. The port of Tilbury is the modern name for Tilbury docks, which were excavated and made operational in 1886 by the then East and West India dock company. They turned out to be white elephants. Dock companies in London were competing with one another in bankruptcy, so the privatisation of any docks in London would be a 19th-century step, to some extent.
If the Government have their way, there will not be more than one dock company in London. However, there will be other wharves with which there will be direct competition. Then there is the question of competition from continental ports. There is no doubt that the port of Tilbury, although it is the nearest to London, will not be the only one serving London and the south-east. Dunkirk, Antwerp and others will be rivals, especially with the opening of the channel tunnel.
The creation by the House of the Port of London authority, together with the voting in of the administration in 1906, was a momentous step. In effect, the port of London was the pioneer trust port. Constitutional books throughout the world indicate that the Port of London authority, which was introduced by the Government of Mr. Asquith, was a model. It was set up to create a river highway by means of dredging; to be a navigation and safety authority; to take over the functions of the dock companies; to be a warehousing body; to provide specialist services; and to plan expansion. I did not always agree with it in its later stages, but, as a public authority, it fulfilled those purposes.
The King George V dock, which is in my constituency, was opened as a public facility. Indeed, the expansion of the rather small Tilbury docks into what we have today was accomplished by way of post-war development under public enterprise. Some hon. Members may remember hearing Dudley Perkins on the radio. His talents as a dock and port manager were much appreciated. He created what today, for PR purposes, is the port of Tilbury.
I come now to the question of competition. The ports of the near continent—particularly Dunkirk—have received a tremendous amount of public support. This is one area of European Community harmonisation that does not yet seem to have been explored. I am not saying that there should be such harmonisation; I am saying simply that it has not been introduced. With the opening of the channel tunnel, the ports of the near continent will be in direct competition with the Thames. Any


installations on the Thames—public, private, or of mixed ownership; dock, river, pier, wharf, pontoon, or whatever—will he aware of this. Here, the Government's optimism may be somewhat misplaced. Capital for the ports of France has been provided by public subscription and Government grants, and the system has worked very well. Alas, successive Governments on this side of the channel have not done likewise for the port of London.
The Port of London authority is not like any of the port trusts about which we heard in earlier debates. It was established as a sort of co-operative involving port users, municipal authorities, representatives of labour, and the lighterage companies. There never was an election, but that was the concept. However, gradually the port authority fell into the the hands of the Government. Now, every member of the board is appointed by the Secretary of State. Schemes that the PLA puts to the Minister have to be in line with what he wants. It is therefore very important that Parliament have the power to approve or reject.
The Minister may say, "We have a majority anyway, so why come to Parliament?" The reason is the need for public visibility, for scrutiny. PLA capital development, particularly that at Tilbury, was undertaken with public money. In the early 1900s the House took action in response to the failure of private enterprise. That is a strong case for the principle of trust ports to be extended to the Port of London authority and Tilbury.
When the docks were built the lighterage industry succeeded in ensuring that a free water clause was included in the docks Bills. It was resented by the wharfingers but welcomed by the dock companies. The result was that transport by water in London was made flexible. A large amount of cargo was discharged into barges and taken up river. It became a very finely balanced transport system. If the port of Tilbury becomes a separate private enterprise—I hope that it does not—the free water lighterage provision ought to be maintained. The Minister may not be able to answer that point now, but if the relevant statutory instrument were to be considered by the House, the matter would be discussed then.
That is another reason why the Minister ought to accept these modest amendments. They would result in the port of Tilbury having the same conditions applied to it as I hope will he applied to all other United Kingdom trust ports.

Mr. Wallace: In Committee I dealt in detail with the arguments in favour of affirmative resolutions. I welcome the fact that the Minister has kept his word and introduced his amendments. A minor difference in detail between my amendment No. 59 and the Government amendment is that my amendment would also apply, where orders were made under clause 8(7), to schemes where a port had been privatised voluntarily.
The hon. Member for Teignbridge (Mr. Nicholls) seems to regard Parliament as somewhat of an inconvenience; he does not appear to believe that Parliament should have anything to do with the matter. He overlooks the fact that assets currently administered by trustees for the public good are to be transferred into private hands. The trustees may do that willingly and voluntarily, but such a transfer requires scrutiny. Parliament should not be bypassed.
The Government amendments meet the spirit of what the Minister promised in Committee. He is therefore to be congratulated.

Mr. McLoughlin: This has been a useful debate. I am not sure, however, that the hon. Member for Orkney and Shetland (Mr. Wallace) will agree with everything that I am about to say.
Amendments Nos. 19, 20 and 21 reflect the concern expressed by a number of hon. Members in Committee. They felt that, where my right hon. and learned Friend the Secretary of State confirms by means of an order a scheme that he himself has initiated through a direction to a port that has not submitted its own scheme within two years of enactment, or where he has made the scheme himself by order under clause 11 or clause 19, that order shall be subject to affirmative resolution, thus enabling a full debate to take place in both this House and another place. I know, too, that the British Ports Federation places considerable importance on the matter.
Hon. Members have, however, drawn attention to a further aspect of the order-making process to confirm schemes of transfer where schemes are brought forward voluntarily by ports. If an order is made to confirm such a scheme, and it is subject to the negative resolution procedures, it may be prayed against at any time within 40 days after it has been made, during which Parliament is sitting. It is very unlikely that the Bill will be enacted in time for schemes to be made before the summer recess. That means that the 40-day period would not begin to run until Parliament resumes after the summer recess and, depending on when Parliament resumes, would continue until the second half of December or even mid-January. It is argued that it would be unrealistic for prospective purchasers of a port to consider making serious bids until there was absolute certainty that an order confirming a scheme of transfer could not be annulled. The ports that are anxious to reap the full benefits of privatisation as early as possible are naturally concerned about the delay, and about the disruption and uncertainty that it would cause.
It would be wrong, when ports are anxious to achieve privatisation as rapidly as they can, that they should be held back in this way. That applies to the PLA's sale of Tilbury and to other ports under part I. I hope, therefore, that the House will accept the amendments which will apply the affirmative resolution procedure when orders are made following my right hon. and learned Friend's exercise of his power of compulsion and of removing any parliamentary process from orders that are made, whether under part I or under part II, to confirm schemes brought forward voluntarily by ports.
I am advised that certain of the amendments tabled by my hon. Friends are technically defective. However, the House would achieve the objectives that I have stated by accepting Government amendment No. 19 and amendments Nos. 75 and 76 tabled by my hon. Friend the Member for Teignbridge (Mr. Nicholls), who made an important point.
I appreciate the comments of the hon. Member for Orkney and Shetland. If I understand him aright, there was no concern about the ports that wish to come forward. A number are waiting for the enactment of the Bill so that they can follow through the process of opening up to privatisation.
As the hon. Member for Newham, South (Mr. Spearing) rightly said, the amendments would oblige the Secretary of State to make an order, with affirmative resolution procedure, to confirm any exercise by the PLA of its powers to dispose of Tilbury. That would be a quite impractical method. I accept, as the hon. Gentleman said, that Tilbury is different, partly because its privatisation is contained in the Bill. For the other trust ports, the Bill is an enabling measure, apart from the reserve powers. The privatisation of Tilbury is on the face of the Bill unless the PLA decided not to privatise, in which case the affirmative order and compulsion could be exercised by the Secretary of State after two years. That is not likely to be the case.
In one respect, the hon. Member for Newham, South was slightly unfair to the PLA. He said that it acted solely as an agent for the Secretary of State. That is wrong, because it acts under its own statute, under which it has responsibilities. I am sure that the hon. Gentleman accepts that clarification.

Mr. Spearing: Yes, the PLA acts under both private and public statutes. However, the point is that to divest itself of the operations at Tilbury, it would use the Bill, which the Minister has proposed.

Mr. McLoughlin: I think that we could split hairs on the argument on many occasions.
We have had an interesting debate. I hope that the House will accept the reasoning behind my remarks, and will accept Government amendment No. 19 and amendments Nos. 75 and 76.

Mr. Bell: I agree with the Minister that this has been an interesting and constructive debate. I agree with the point made by the hon. Member for Orkney and Shetland (Mr. Wallace) that the Minister has kept his word in Committee to table an amendment on Report. It broadens the provisions on the affirmative resolution, and on that basis, I beg to ask leave of the House to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 12

LEVY ON INITIAL DISPOSALS OF SECURITIES OF SUCCESSOR COMPANIES

Mr. McLoughlin: I beg to move amendment No. 8, in page 9, line 36, leave out 'ten' and insert 'fifty'.

Mr. Deputy Speaker: With this it will be convenient to discuss amendment No. 46, in page 9, line 36, leave out `ten' and insert 'one hundred'.

Mr. McLoughlin: The amendment rectifies a slight mishap that occurred when the Bill was in Committee. In the main, the Opposition brought it on themselves. They tabled an amendment to increase the rate of levy on the proceeds of the port sales to 100 per cent., and spoke vehemently in favour of it. They then somehow managed to vote for a probing amendment tabled by my hon. Friend the Member for Thurrock (Mr. Janman) to reduce the rate of the levy to 10 per cent. They got the result they deserved.
We in the Conservative party are in the familiar position of having to rescue the hon. Member for

Kingston upon Hull, East (Mr. Prescott) and his colleagues from their embarrassment. The hon. Member was quite open in Committee when he said that he saw himself on the bridge and saw the possibility of causing a disaster——

Mr. Prescott: I said "a revolt in the engine room".

Mr. McLoughlin: I apologise—he saw a revolt in the engine room and took advantage of it. However, he did say that he would not be surprised if the Government returned to this on Report, and that is exactly what we are doing.
The issue of the levy has been discussed at great length, but it is an important matter and I make no apology for returning to it.
The lack of any owner of the trust ports, except the state, means that there is no vendor to receive the proceeds of sale when one of them is privatised. Hon. Members have argued that some or all of the proceeds should go to the nearest local authority, but many of these ports are national rather than local assets, and their relationship with their local authorities varies considerably from one port to the next. Without any levy, the entire proceeds of sale would revert in the form of a windfall gain to the purchaser. That seems clearly wrong, and one side effect is that in theory there would be no limit on the price which a purchaser would be prepared to pay for a port, because he would get the purchase price back as well as becoming the owner of the port. We believe that it is right that the taxpayer should have a share of the proceeds by means of a Government levy.
The question is, how much should this share be? Let us look at the two extremes. At 10 per cent., the figure currently in the Bill, the purchaser of a newly privatised trust port gets back virtually all the money that he has paid. In a situation of competitive bidding, this would drive the price of the port up to ridiculous levels—a result which could, incidentally, seriously disadvantage a managment-employee buy-out team, which might be ill-equipped to raise the amount of finance necessary to mount a successful bid. An example should illustrate this point. If the value of a port is generally accepted to be about £10 million, a bidder might be prepared to pay as much as £50 million for it. The Government would take £5 million as their 10 per cent. levy, but the bidder, if he were successful, would get back £45 million together with the port, worth £5 million. I think everybody would agree that that would be a fairly good deal.
From the standpoint of simplicity, a 100 per cent. levy has more to recommend it, since it does not drive up the price of the port; the Government simply take the whole of the proceeds. But this would put the sale of the trust ports on the same basis as that of nationalised industries and would ignore the very significant differences that in fact exist between them. Hon. Members will not be surprised to learn that the idea is not at all popular with all the ports themselves, not least because it appears to ignore the fact that the trust ports are independent of Government. By allowing nothing back to the purchaser, it would not allow them to plough any extra capital back into the industry.
With the levy at 50 per cent.—the rate of levy originally in the Bill—a balance is maintained between the interests of the taxpayer and of the new port owner. The Government could indeed, as has been pointed out, stand


to get something like 100 per cent. rather than 50 per cent. of the actual value of the port by way of levy, since setting the rate at 50 per cent. is likely to cause the price of the port to rise above its market value, although not so much as to distort the bidding process as seriously as a 10 per cent. levy would. But 50 per cent. of the price will revert to the purchaser of the port, and that will be a further incentive for a port to privatise itself, on top of the benefits of privatisation itself. That is because of the extra capital which the sale will generate for the port, which it may need for investment in the port or to use as seems best in its commercial judgment.
For these reasons, I make no apology for bringing this amendment back to the House. I believe that 50 per cent. is the right level for the Government's levy, and I accordingly commend the amendment to the House.

Mr. Prescott: The reason we voted for the 10 per cent., as the Minister knows, is that we wanted to hear from him an explanation that we did not hear in Committee, and which I think we have just heard from him, of how they arrived at the figure of 50 per cent. Our amendment for 100 per cent. tonight gives us a chance to reiterate our committee amendment, although we were not provided with the opportunity to vote for it.
We voted for the 10 per cent. of the hon. Member for Thurrock (Mr. Janman), who I see is not here this evening. Is the Select Committee still sitting, or is it on a visit? There are precedents. Those who vote against the Government are often sent to the most attractive places in the world. I do not know whether that is what has happened to the hon. Member for Thurrock, although I note that the amendment relates to precisely the clause about which he was concerned. He said that it entailed exploitation, and that the Government were not entitled to take the money, which belonged to the ports themselves.
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The Minister has already conceded part of the argument. His illustration based on everyone operating on the £10 million figure appears to have come from the interesting document made available to the conference held by the Waterfront organisation and produced by Mark Seligman, of the consultants Warburg and Co. Ltd. which dealt wiih getting the capital structure right. That is a very important point, and the matter is highly complex.
Any hon. Member reading through the passages about how one gets the capital structure of the companies right in such circumstances will realise that the judgment of Solomon needs to be exercised. Presumably that also applies to commercial judgments as to whether one makes a profit or not. The heart of the matter is the question that we are dealing with here: would the Government's take affect that balance? Presumably, not only the share price will be affected by that judgment. Presumably it also affects the possibility of people bidding for a buy-out.
The Minister made clear what would happen to the value of the company if the figure were 10 per cent.—the figure stipulated in the Bill as drafted following amendments accepted in Committee. I shall not go through all the details. Hon. Members can see from the document how the example is arrived at. It refers to a model company worth £10 million—with a turnover of £10 million—and a profit of 15 per cent. A judgment is made about how the price-earnings ratio is arrived at, and the document gives a net asset value of £5·3 million. The

figures are there in the document should hon. Members wish to read them. As the Minister said, if the Government took 50 per cent., it would be equivalent to the £5·3 million net asset value. It would then be argued that the Government were getting 100 per cent., as some hon. Members said in Committee.
The question that is important to this debate is whether the purchase price for a management-worker buy-out will be affected. I hope that the Minister will now answer a question that he did not answer before. I do not intend that as a criticism, as he had a number of questions to answer, but he now has another opportunity to answer it. The statement in The Guardian said that the Department was making it clear that it would be bound to accept the highest figure. As has been said, that is not necessarily the case under competitive tendering arrangements; they can accept less. But presumably there is a limit to how much less they can accept.

Mr. McLoughlin: I confirm that the story in this morning's edition of The Guardian is inaccurate and that our original statements to the effect that we may not necessarily go for the highest bidder still hold good.

Mr. Prescott: That statement will be welcomed by those who want a move in that direction. We have made our position clear. In the main, however, the Government say that it is one of their objectives to do that, and I think that they will have to do it. The interesting question is to what extent the Government are prepared to discount the highest bid in order to accept an employee-management buy-out. That is the importance of the judgments made about the net asset value of the companies and the price that is arrived at.
The Minister has conceded that, even under his own formula, the 10 per cent. figure would produce a £45 million windfall. Clearly that would be an advantage to the purchaser, who will have no legitimate claim to that money. At least the Government can say that they have a more legitimate claim. That is their argument for the 50 per cent. levy. Unlike the individual who purchases a company with its assets and either makes a killing or not, depending on the Government's levy, the Government will take the money in the name of the community.
The other side of the coin is the Opposition amendment, which provides for the 100 per cent. figure. The Minister rightly pointed out that that would take out the excess money that can be made. He then said—curiously, in my view—that the company would be like a nationalised industry, because it would not be left money with which to expand. I do not understand that. A public limited company cannot be like a nationalised industry in that sense. The company would have its own debt and equity structure.
Presumably, before making a bid, the prospective purchasers would make judgments about the distribution of the company's equity, its value and its debts. The judgment whether sufficient resources will be available to meet the investments that might be required to allow the company to expand will depend on the circumstances. In the case of a port such as Dover, for example, the problem is not a shortage of money for use in developing the port; Dover has already done as much as it can in that direction.
There is a strong argument for gold-plating port investment. We say that the assets could be used for investment in activities other than port-related activity


which may be beneficial to the port. That is a legitimate argument. It is about using the extra land that becomes available. There is not necessarily a shortage of money, as the Minister suggested. That is a side issue. We are expected to vote on whether to change the levy from 10 per cent. to 50 per cent., as the Government require, or to 100 per cent.
As we are agreed that to give the whole windfall to the taxpayer, we should opt for the full 100 per cent. levy in this manoeuvre, and our amendment does so, we can be said to be the taxpayer's champions on this occasion. We are taking the 100 per cent. option. The Minister says that a 50 per cent. levy is better because it will allow some money to go back into the coffers. That is where the formula produced by the expert comes in. He says that, if one does that and buys a company for £10 million, of which the net asset value is less than the market value, one could purchase the company, pay £10 million for it and put £5 million of it—50 per cent.—back in the books.
It is argued that, somehow, a corporate raider may then decide that it wants to take out that £5 million and put it in some other part of its operation outside port activity. There is nothing to stop it doing that. The important point for the debate is that the job of the people who want to form a management-worker buy-out—that is one of the objectives of the Government—is made much more difficult with a 50 per cent. levy than with a 100 per cent. levy. That is the case by virtue of the Minister's own argument. The 10 per cent. levy is one extreme. The 100 per cent. levy is the other. With a 50 per cent. levy, hey diddle diddle, he thinks he is down the middle, he has landed with the Liberals and he is happy. Fine. But he cannot ignore the fact that that is likely to be less attractive to the buy-out consortium than the 100 per cent. levy.

Mr. Henry Bellingham: No, it is not.

Mr. Prescott: I am simply using the Minister's arguments. I believe that they are reasonable, but the hon. Member for Norfolk, North-West (Mr. Bellingham) may have a different view. We even argued it out in Committee. But the point is that the 100 per cent. levy is a better deal. If the hon. Gentleman cannot accept my view, I suggest—even the Minister's Parliamentary Private Secretary may get around to reading things—that he reads an article in The Financial Times on 6 January 1991 which dealt with the point. It said:
There is little rationale for the proposed 50 per cent. levy. Whatever money a port receives from its sale will revert to the person who buys it …the result will be to drive up the bidding, perhaps beyond the reach of a management-employee consortium.
The Government cannot have it both ways. If they want to get money out of sales, that is fine: they can take the full 100 per cent. If they want to go halfway, they can take 50 per cent. But that will affect the price, and it is likely to be a disincentive to management and employees to buy out the port, or to make it more difficult for them to do so.
We started the debate on the point that the Government came along with a generous offer to pay some of the expenses of preparation for an management-employee buyout. That is a helpful move to those who want to be involved in that process. It is all right providing the money to work out the bid, but it is much more

important to provide the capital to make the bid. Otherwise, it is just an exercise. Indeed, it is likely to be just that. If the Government stick to the 50 per cent. levy, they will get the worst of all worlds. They could take the full money—the 100 per cent. Or they could take the 10 per cent. Then someone would get a large windfall. I agree with the Government that that is not an attractive way of dealing with the matter. But given the circumstances, the 50 per cent. levy is not the best.
If we want to give a definite preference to the management-employee buyout, it would be better to vote for the 100 per cent. levy. The Financial Times says so, and it follows from the logic of the argument. It is absolutely right. The Minister has already said that he will not accept the highest bid. He has not said by how much he would discount it. Would it be as much as 50 per cent? I doubt it. Under those circumstances, the Minister has convinced me more than ever to vote for the 100 per cent. levy in order to assist those who wish to take part in a management-employee buy-out.

Mr. Michael Carttiss: I accept the Committee's decision. I regard it as a mishap—even if the hon. Member for Kingston upon Hull, East (Mr. Prescott) and his friends voted with my hon. Friend the Member for Thurrock (Mr. Janman), who I am sure is detained on important business. He has not been sent anywhere. No one offered me the opportunity to go anywhere else. Had they done so, I should have gone to Great Yarmouth, of course. But here I am and I have not changed the view that I expressed in this Chamber on Second Reading.
It is wrong for the Government to take 50 per cent. of the disposal of the securities of the successor companies of trust ports. I shall not vote for the 50 per cent. which my hon. Friend the Minister is seeking to restore to the Bill. Up to now, he has a good Bill. Even the 50 per cent. clawback on the sale of land I was not too worried about. Here he is spoiling a six-hour day with his attempt to reverse an excellent decision in Committee.
I object to the 50 per cent. levy for two principal reasons. First, I see no reason why the Government should get a share of the proceeds when they have contributed nothing. We have had much talk about windfall. In the Tory party where I was brought up that was called legitimate profit motive. What is all this nonsense about windfall? Since when has purchasing shares and selling them at a profit, or investing in an enterprise and making money out of it, been a windfall? That is what the Conservative party exists to promote.
A Minister in a Conservative Government, even in the post-Thatcherite era, should not talk in such contemptuous terms about "windfall", when he knows very well that even under this Government the tax regime will enable profits to be taxed and some money to go back to the community. The Government have given nothing to the trust ports and, in setting them up as private companies, have no business taking any share of the proceeds. That is my first reason for objecting. It offends my concept of the Conservative party's devotion to the profit motive as a proper and legitimate exercise for business people to engage in when purchasing an enterprise.
My second reason is more local. My port of Great Yarmouth is under the turnover limit of £5 million above which the legislation will operate the compulsory privatisation provision. People in Great Yarmouth will be


in the fortunate position of the people of Poole, in the sense that they can or cannot, as they please, go ahead with privatisation.
The second and far more important reason for my opposing the Government amendment to restore the 50 per cent. levy that they had in the Bill originally is that it will act as a disincentive for the port of Great Yarmouth to go down the path towards privatisation that the Government would surely wish to encourage, and which I have been doing my utmost to persuade the authority and the port users to do. There is no way that I am going back to Yarmouth tonight if the amendment goes through—[Interruption.]Well, at the end of the week or whenever it is. If I lose the argument I might go home and not come back for a week or two.
There is no reason for my arguing any further in Great Yarmouth for the privatisation of the port if 50 per cent. of the money from the disposal of the shares is to go to the Government. The Government are a successor of many Governments who have contributed not a penny piece to the port of Yarmouth, and they will not get a penny piece except through the proper taxation procedures, which naturally I support.
I hope that the House will wholeheartedly oppose this ill-conceived amendment.

Mr. Wallace: As in Committee, I find myself in great sympathy with the hon. Member for Great Yarmouth (Mr. Carttiss). He chides the Government for trying to impose a tax where no tax existed, which ill becomes a Government who have set themselves the standard of being a tax-cutting one. Here we have them introducing a new tax. At least tonight the Minister gave a slightly better justification for the levy than we have heard before.
When the matter was first introduced as part of the Finance Act 1990, the reason given by the then Chief Secretary to the Treasury, now Chancellor of the Exchequer, was that it reflected the fact that Governments had contributed so much to the ports over the years through grants and loans that it was time they got something back. As the hon. Member for Great Yarmouth has just pointed out, there are ports to which the Government have not contributed a penny piece, yet they want to take money from them.
My main objection is that the Government are seizing money because it belongs to no one else. They are doing so because of the decision in the case of the Trustee Savings bank, when the House of Lords took the view that, although a property may not belong to the Government, because it belongs to no one else it must belong to the state. This country has never developed the concept that such property might belong to the people. Many of the trusts were set up to serve the local communities and those who trade in them and the Government are taking money away from those communities.
11.45 pm
If the Minister had proposed a levy and said that its proceeds would be reinvested in the communities in which the ports are situated, many of us would have supported it enthusiastically. As the hon. Member for Great Yarmouth said, the ports cannot exist in a vacuum. In Committee, we heard the details of the long-awaited dual carriageway or flyover in Great Yarmouth. If such transport provision were made there, it would greatly benefit the port. Therefore, it would not be unreasonable to expect that any

proceeds from the sale of the port to the private sector should be used to finance the infrastructure to support the port. If the Government had adopted such an approach, it would have been supported by the House, but they are pocketing the proceeds of the sale of ports for themselves. I did not think that that was what the Conservative party was about, so I have no enthusiasm for the increased amount that it will put into its coffers.

Mr. McLoughlin: I am not sure what the hon. Gentleman thinks the Government do with the money they raise. It goes neither to my right hon. Friends nor to myself; it goes to the people. It goes straight into the Consolidated Fund to provide various services. Some of the hon. Gentleman's arguments are strange, to say the least.

Mr. Wallace: What objection does the Minister have to that money being reinvested in the communities from which it comes?

Mr. McLoughlin: The ports are not necessarily local assets but can also be national assets. They may have obtained their wealth from people from other parts of the country. Nobody would argue, for instance, that Dover has obtained its wealth because people from throughout the country use the port. It would be hard to say that the proceeds of the sale of that port should go into the Dover area.
My hon. Friend the Member for Great Yarmouth made a vociferous speech, as he did in Committee, and I respect his position. However, the Government decided the best way to proceed. Although I accept some of the arguments that the hon. Member for Kingston upon Hull, East put on record, I have outlined the reasons why the Government decided to take 50 per cent.

Question put, that the amendment he made:

The House divided:Ayes 140, Noes 52.

Division No. 123]
[11.48 pm


AYES


Alexander, Richard
Colvin, Michael


Alison, Rt Hon Michael
Coombs, Anthony (Wyre F'rest)


Amess, David
Cope, Rt Hon John


Amos, Alan
Cran, James


Arbuthnot, James
Currie, Mrs Edwina


Arnold, Jacques (Gravesham)
Davies, Q. (Stamf'd &amp; Spald'g)


Arnold, Sir Thomas
Day, Stephen


Baker, Nicholas (Dorset N)
Douglas-Hamilton, Lord James


Bellingham, Henry
Dover, Den


Bennett, Nicholas (Pembroke)
Dunn, Bob


Benyon, W.
Durant, Sir Anthony


Bevan, David Gilroy
Dykes, Hugh


Blaker, Rt Hon Sir Peter
Evennett, David


Bonsor, Sir Nicholas
Fallon, Michael


Boscawen, Hon Robert
Field, Barry (Isle of Wight)


Boswell, Tim
Forman, Nigel


Bottomley, Peter
Forsyth, Michael (Stirling)


Bottomley, Mrs Virginia
Freeman, Roger


Bowden, Gerald (Dulwich)
French, Douglas


Bowis, John
Gale, Roger


Brandon-Bravo, Martin
Gill, Christopher


Brazier, Julian
Goodhart, Sir Philip


Bright, Graham
Goodlad, Alastair


Browne, John (Winchester)
Gorman, Mrs Teresa


Buck, Sir Antony
Greenway, John (Ryedale)


Burns, Simon
Gregory, Conal


Burt, Alistair
Griffiths, Peter (Portsmouth N)


Butterfill, John
Ground, Patrick


Carrington, Matthew
Hague, William


Channon, Rt Hon Paul
Hamilton, Hon Archie (Epsom)


Chapman, Sydney
Hamilton, Neil (Tatton)


Chope, Christopher
Hargreaves, Ken (Hyndburn)






Harris, David
Rhodes James, Robert


Hawkins, Christopher
Rifkind, Rt Hon Malcolm


Hayes, Jerry
Roberts, Sir Wyn (Conwy)


Hayhoe, Rt Hon Sir Barney
Rumbold, Rt Hon Mrs Angela


Heathcoat-Amory, David
Ryder, Rt Hon Richard


Hicks, Robert (Cornwall SE)
Sackville, Hon Tom


Hogg, Hon Douglas (Gr'th'm)
Sainsbury, Hon Tim


Howarth, Alan (Strat'd-on-A)
Shaw, David (Dover)


Howell, Rt Hon David (G'dford)
Shaw, Sir Michael (Scarb')


Hughes, Robert G. (Harrow W)
Shepherd, Colin (Hereford)


Hunter, Andrew
Speller, Tony


Irvine, Michael
Stanley, Rt Hon Sir John


Jack, Michael
Steen, Anthony


Jackson, Robert
Stern, Michael


Jones, Robert B (Herts W)
Stevens, Lewis


King, Roger (B'ham N'thfield)
Stewart, Allan (Eastwood)


Kirkhope, Timothy
Stewart, Andy (Sherwood)


Knapman, Roger
Stewart, Rt Hon Ian (Herts N)


Knight, Dame Jill (Edgbaston)
Summerson, Hugo


Knowles, Michael
Taylor, John M (Solihull)


Lang, Rt Hon Ian
Thompson, Patrick (Norwich N)


Lawrence, Ivan
Thorne, Neil


Lilley, Rt Hon Peter
Townend, John (Bridlington)


Lloyd, Peter (Fareham)
Twinn, Dr Ian


Lyell, Rt Hon Sir Nicholas
Viggers, Peter


Macfarlane, Sir Neil
Walden, George


MacKay, Andrew (E Berkshire)
Waller, Gary


Maclean, David
Ward, John


McLoughlin, Patrick
Warren, Kenneth


Mans, Keith
Watts, John


Maples, John
Wells, Bowen


Maxwell-Hyslop, Robin
Wheeler, Sir John


Mellor, Rt Hon David
Widdecombe, Ann


Meyer, Sir Anthony
Wilkinson, John


Mills, lain
Wood, Timothy


Morrison, Sir Charles
Yeo, Tim


Nicholls, Patrick



Norris, Steve
Tellers for the Ayes:


Paice, James
Mr. Greg Knight and Mr. David Davis.


Patnick, Irvine





NOES


Barnes, Harry (Derbyshire NE)
Lamond, James


Battle, John
Lewis, Terry


Bell, Stuart
Livsey, Richard


Bellotti, David
Loyden, Eddie


Bradley, Keith
Madden, Max


Brown, Ron (Edinburgh Leith)
Marshall, David (Shettleston)


Campbell, Menzies (Fife NE)
Morgan, Rhodri


Carlile, Alex (Mont'g)
Murphy, Paul


Carttiss, Michael
Nellist, Dave


Clelland, David
Pike, Peter L.


Crowther, Stan
Powell, Ray (Ogmore)


Cryer, Bob
Prescott, John


Dalyell, Tarn
Quin, Ms Joyce


Dixon, Don
Robertson, George


Doran, Frank
Salmond, Alex


Dunnachie, Jimmy
Skinner, Dennis


Fearn, Ronald
Spearing, Nigel


Foster, Derek
Steinberg, Gerry


Galloway, George
Taylor, Matthew (Truro)


Griffiths, Win (Bridgend)
Wallace, James


Hain, Peter
Walley, Joan


Haynes, Frank
Wardell, Gareth (Gower)


Henderson, Doug
Welsh, Michael (Doncaster N)


Howells, Geraint
Williams, Alan W. (Carm'then)


Hughes, John (Coventry NE)



Hughes, Robert (Aberdeen N)
Tellers for the Noes:


Hughes, Simon (Southwark)
Mr. Thomas McAvoy and Mr. Allen McKay.


Illsley, Eric

Question accordingly agreed to.

Amendment made: No. 9, in page 9,line 43, at end insert—
'( ) costs incurred in pursuance of section (Financial
assistance for proposals to maximize employee participation in equity or successor companies) below in connection with any proposal for maximizing participation by employees of the company whose securities are the subject of the disposal in

ownership of its equity share capital (whether or not the disposal is made for the purposes of implementing any such proposal);'.—[Mr. McLoughlin.]

Clause 16

LEVY ON DISPOSALS OF LAND, ETC

Amendments made: No. 27, in page 12, line 15, leave out from 'company"),' to 'a' in line 18.

No. 28, in page 12, line 19, leave out from 'section' to end of line 34 and insert
'shall be chargeable in respect of any gain accruing to the company on a chargeable disposal—

(a) of that land or interest; or
(b) of an interest of any specified description in the land so transferred or in the land in which the interest so transferred subsists at the time of the transfer under that section;

made within the period of ten years beginning with the date on which the company ceases to be a wholly-owned subsidiary of the body which immediately before the transfer was the relevant port authority in question.

(2) The levy shall be charged—

(a) at the rate of twenty-five per cent. on the amount of the gain, in the case of a disposal made within the first five years of the period mentioned in subsection (1) above;
(b) at the rate of twenty per cent. on the amount of the gain, in the case of a disposal made within the sixth or seventh year of that period; and
(c) at the rate of ten per cent. on the amount of the gain, in the case of a disposal made during the remainder of that period.

(2A) The levy shall be paid by the chargeable company to the appropriate Minister.

(2B) There is a disposal of land or an interest in land for the purposes of this section and section (Supplementary and consequential provisions relating to levy under section 16) below if there would be such a disposal for the purposes of the 1979 Act.'.

No. 29, in page 12, line 36, leave out paragraph (a) and insert—
'(a) for determining when and by whom any disposal of land or an interest in land is to be regarded for the purposes of this section as being made;'.

No. 30, in page 12, line 40, leave out 'those purposes' and insert
'the purposes of this section;'.

No. 31, in page 12, line 42, leave out 'those purposes' and insert
'the purposes of this section'.

No. 32, in page 13 line 4, leave out paragraph (a).

No. 33, in page 13, line 29, leave out from 'to' to second 'with' in line 30 and insert
'corporation tax on chargeable gains'.

No. 34, in page 13, line 32, leave out 'subsection (3) above' and insert 'this section'.

No. 35, in page 13, leave out lines 35 to 43.

No. 36, in page 13, line 45, leave out from first 'specified' to end of line 48 and insert
'means specified in an order under this section.'.—[Mr. McLoughlin.]

Clause 18

POWER OF PORT OF LONDON AUTHORITY TO FORM A COMPANY TO OPERATE THE PORT OF TILBURY

12 midnight

Mr. Spearing: I beg to move amendment No. 65, in page 15, line 19, after 'activities', insert
`within the curtilage of the Port of Tilbury.'

Mr. Deputy Speaker: With this it will be convenient to discuss also amendment No. 66, in page 15, line 20, at end insert
`not otherwise provided by the Port Authority'.

Mr. Spearing: Clause 18(1) reads:
The Port cf London Authority (referred to below in this Part as 'the Port Authority') shall have power to form a company for the purpose of carrying on—

(a) that part of their undertaking which consists in operating the port of Tilbury; and
(b) any activities which appear to them to be incidental
to or connected with operating the port of Tilbury."


My amendments would effect the changes implied by their wording.
This brief debate continues our discussion of the definition and description of the port of Tilbury. At the ninth sitting of the Standing Committee, the Minister said:
the Government's intentions about Tilbury are clear on the face of the Bill. The document in question"—
referring to the application from the PLA, I think—
which is technical, will determine which properties and functions are transferred to the Tilbury company."—[Official Report, Standing Committee D, 7 March 1991; c. 305.]
The question is: what properties and what functions? Hitherto the Minister has been coy about that. His phrase, on the "face of the Bill", was factually incorrect. These aspects are not on the face of the Bill—but they are in the document referred to. The long title of the Bill in part runs as follows:
to provide for the transfer of certain property, rights, liabilities and functions of the Port of London Authority to a company formed by that authority.
Certain properties, however, are not defined. They could almost be called uncertain properties and uncertain functions.
I am grateful for the earlier ruling that it is perfectly in order for the House to discuss these matters without knowing what is likely to be transferred. The Minister should tell us a little more about this public relations phrase, the port of Tilbury.
In an earlier speech, I outlined the development of Tilbury docks. What will be involved in this change? Will the land adjacent to the operational area be included? What about the rail container depot? Or the dock itself? The dock has value: barges and ships, laid up or carrying cargo, can moor there—it can be used as a mobile warehouse. There are stacking and storage areas. There are workshops leased out to operators and used by the port itself. There are berths in the port. There is a grading dock and associated workshops. There is the lock. There is the passenger terminal, which has a landing stage on the river and an adjacent station. There are wharves which can be adapted for various uses—roll-on/roll-off, for instance—and there is the grain terminal. The annual report of the PLA implies that it is part of the so-called port of Tilbury.
In addition to all that, there are the employees, who are perhaps some of the most valuable assets, although the current managers do not appear to manage them thus. I

have been told that many of the tug crew have recently been made redundant, that anybody over 50 working a lock has been shown the door, or rather the river, and that pay has been reduced recently by up to 30 per cent. That may only be a report. I do not know whether the Minister can confirm all those things. But that is not a good advertisement for the port of Tilbury even if people have it slightly wrong, which I do not think they have. As we know, industrial relations there have not been of the best and there is a case at the moment which is sub judice and on which I shall not comment. The Achilles heel of the port of London in the past has been bad industrial relations.
In the end it would be for the courts to decide what Parliament meant by "certain property". But it is wrong for the House to pass the Bill without a schedule of that property and those functions on the "face of the Bill"—a phrase which the Minister used in Committee. That is not on the face of the Bill and it is not even on the face of Hansard, unless we hear some wise words to the contrary in a moment. The courts cannot look to Hansard, they can only look to the Bill, but at least the House and the public should have something on the face of Hansard.
As I understand it, the Bill refers to the functions as they appear to the PLA and as the Secretary of State agrees. But the PLA covers a great deal more than the so-called port of Tilbury. It operates in three divisions—the river division, which is navigational, Tilbury division, which is largely cargo, and, surprise, surprise, the property division. The Port of London Authority has no fewer than 16 property subsidiaries, some of them with property in the developing area of the upper pool. They are listed in the annual report. There is an income of £13 million a year from rent and sale of land. Much of it may have been sale of land in 1989, but it is quite a lot. It has 25 acres in what was called Thurrock park, immediately adjacent to the so-called port of Tilbury, and now, I believe, renamed the Capstan centre. In addition, as was said earlier, many cliff marshes further down river are still owned by the PLA. It is as much, alas, a property company these days, as it is a cargo-handling company.
I understand from the wording of the Bill that any part of those undertakings in operating the port of Tilbury or any activities that appear to be incidental or connected with operating the port of Tilbury could be transferred. The operators could claim that for almost any one of those features. So it would be possible for the PLA to privatise itself—I have heard it described thus—along with any of its assets, which are not subject to parliamentary approval, as we have, alas, decided, and for which the Secretary of State thought that privatisation was justified.
I have a rather uncharitable feeling that the Minister and the PLA together could more or less disintegrate the PLA as we know it today. The port of Tilbury could have all sorts of subsidiaries up and down the river. Theoretically, it could land cargo on the Terrace of the House of Commons. If Conservative Members continue to vote away the powers of the House of Commons, it might turn into a wharf and that may be related to the port of Tilbury. That may be far-fetched, but what property upstream in London could not necessarily be connected with the port of Tilbury? Any cargo landed there or any cargo transferred there from any wharf on any part of the tidal Thames could be and is connected by water to the port of Tilbury.
A legal judgment on those matters would probably be made in favour of the Minister and the PLA. Therefore,


this provides a channel for the port of Tilbury to expand up and down the river in almost any way that the PLA and the Minister wish.
Amendment No. 66 would confine activities to those
not otherwise provided by the Port Authority".
The authority provides navigation and other aids, but if the Minister has his way, and if the general election goes his way—which I do not think it will—I suspect that there would not be much of the port authority left, because Tilbury would gobble it all up.
The Minister may deny everything that I have said. I hope that he does, and that I am wrong. I often put points in the House that I hope are wrong. I am giving the Minister an opportunity to deny the wild scenario that he may think I have painted, and to say what he has in mind. I hope also that he will give an undertaking to table amendments to be considered in another place that will define what are the certain properties and certain functions in question.
Earlier, in opposing another of my amendments to allow the House to have the final say, the Minister said that the Bill already included such a provision. It does not, and until it does, we should not rest content.

Mr. McLoughlin: The hon. Gentleman will not be surprised to learn that I cannot recommend his amendments to the House because they would be too restrictive of the activities that could be transferred to the new Tilbury company. It could be entirely sensible to transfer activities that are currently undertaken outside the geographical limits of the port of Tilbury.
In Committee, I mentioned the example of an inland clearance depot that might not relate entirely to the port of Tilbury, and which might lie outside the port itself. The hon. Gentleman's amendments would exclude such a depot from the transfer. The effect of amendment No. 66 is less clear, but it might exclude activities that relate almost but not quite to Tilbury, but which in all logic should be transferred to the new company. I understand the hon. Gentleman's concern, but his amendments are not the best way to proceed.
When I said earlier that privatisation is on the face of the Bill, I was referring to Tilbury being a specific part of the Bill, as opposed to the other trust ports, which will require an enabling measure.

Mr. Spearing: The Minister's brevity emphasises the wild scenario that I painted. He did not take the opportunity to deny, other than in the case of a wharf on the Terrace of the House of Commons, the principle that I outlined, which confirms my worst fears.
The Minister made reference to an inland clearance depot. He may recall that the PLA once had such a facility, at Orsett. I believe that it failed a few years ago, or that it was sold. More likely, it is still the property of one of the PLA's many subsidiaries, and might be reactivated.
Definitions can perhaps best be dealt with in another place, and I hope that my points will be taken up there. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made:No. 10, in page 15, line 23, leave out subsection (3).—[Mr. McLoughlin.]

Clause 19

TRANSFER TO THE COMPANY OF RELEVANT PROPERTY, ETC., OF THE PORT AUTHORITY.

Amendment proposed:No. 11 , in page 15, line 38, at end insert—
`( ) Together with a scheme submitted under subsection (1) above the Port Authority shall submit to the Secretary of State a copy of the memorandum and articles of the company.'.—[Mr. McLoughlin.]

Mr. Deputy Speaker: With this, it will be convenient to consider Government amendments Nos. 12 and 13.

Mr. Barry Field: This amendment is the result of an undertaking given by my hon. Friend the Minister in Committee, at column 302 of Hansardfor 7 March 1991, in response to an amendment in my name, but moved by my hon. Friend the Member for Faversham (Mr. Moate) with his characteristic generosity and kindness, as I was unfortunately absent.
That amendment stemmed from representations by the London General Shipowners Society, and despite the fact that my hon. Friend the Minister conceded the point with which it dealt, the society continued to be concerned that Tilbury was not to be subject to advertising in part II of the Bill, in the same way as the other ports are, in part I.
My hon. Friend tackled that issue in Committee by saying that Tilbury will effectively be privatised when the Bill goes on to the statute book, whereas other ports have yet to come forward.
12.15 am
Donald Chard, the secretary of the London General Shipowners Society, which is quite an ancient society, as my hon. Friend knows, is still worried about that aspect of part II. Perhaps my hon. Friend might consider writing to him to try to reassure him about it. He continues to believe that by not advertising that aspect of the Bill in the same way as for ports covered in part I, something may be missed from the future consultation process.
My hon. Friend answered questions in Committee. I hope that he will be able to meet the concerns of the London General Shipowners Society.

Mr. McLoughlin: I assure my hon. Friend that I shall write to the gentleman he mentioned to set out the Government's position.

Amendment agreed to.

Amendments made:No. 12, in page 15, line 39, leave out `submitted under subsection (1) above' and insert 'so submitted'.

No. 13, in page 16, line 6, at end insert—
`( ) Before—

(a) confirming a scheme so submitted (with or without modifications); or
(b) making a scheme of his own under subsection (4)(b) above;

the Secretary of State may first (if he thinks fit) give the Port Authority a direction requiring them, before such date as may be specified in the direction, to secure that such alterations are made to the memorandum and articles of the company as may be specified in the direction.'.—[Mr. McLoughlin.]

Clause 20

SUPPLEMENTARY PROVISIONS RELATING TO THE TRANSFER UNDER SECTION 19

Amendments made:No. 4, in page 16, line 39, at end insert—
'(1A) The scheme shall contain the required provision for the protection of pension rights described in section (The required provision for the protection of pension rights)below.'
No. 14, in page 16, line 44, after 'Authority', insert
`(or, where the scheme is made by the Secretary of State, to the Secretary of State)'—[Mr. McLoughlin.]

Schedule 2

GENERAL SUPPLEMENTARY PROVISIONS WITH RESPECT TO TRANSFER UNDER SECTION 19

Amendment made:No. 24, in page 30, line 28, leave out
`Port Authority or the company (as the case may be)' and insert 'company;'.—[Mr. McLoughlin.]

Mr. Spearing: I beg to move amendment No. 72, in page 17, line 33, leave out subsection (4).

Mr. Deputy Speaker: With this it will be convenient to take amendment No. 71, in page 17, line 34, after `property', insert
`owned by the Port Authority which is wholly and exclusively devoted to purposes relating to the operation of the said port of Tilbury'.

Mr. Spearing: Amendment No. 71 relates to the deletion of clause 20(4), which states:
The granting by the scheme to the company of a lease of any property shall be regarded for the purposes of—

(a) section 19 above and this section; and
(b) Schedule 2 below;

as a transfer of that property to the company by the scheme.
I would like the Minister to tell us why the clause is there and why he would reject my amendment No. 71 which adds
exclusively devoted to purposes relating to the … port of Tilbury.
He does not say that it is a 500-year lease. As I understand it, this is not a measure of leasehold reform. Otherwise, the transfer of leased property would encourage the company to enter into a lease and to transfer leasehold property to freehold by a statute that appears to be transferring property—public property at that—at controversial compensation.
This is a brief probing amendment. I hope that the Minister will tell us why the provision is there, how it will be used, and why it should not be restricted soley to the functions of the so-called port of Tilbury.

Mr. McLoughlin: I fear that the amendments could result in the transfer of some of the property to the new Tilbury company not being handled in the most sensible way. I see nothing objectionable in the property being leased to the new company and it seems to be quite wrong to exclude the leasing of property that is not exclusively used in connection with the operation of the port of Tilbury. That is the reason why we cannot accept the amendments and I hope that the explanation that I have given is sufficient.

Mr. Spearing: I think that the Minister's explanation is comprehensive and efficient, but again perhaps this is a

matter that might be probed at greater leisure in a more appropriate place. Therefore, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 22

POWERS OF DISPOSAL IN RELATION TO THE COMPANY

Amendment made:No. 15, in page 18, line 40, at end insert—
`( ) In exercising his powers under subsection (4) above the Secretary of State shall have particular regard to the desirability of encouraging the disposal to managers or other persons employed by the company of the whole or a substantial part of its equity share capital.'.—[Mr. McLoughlin.]

Clause 25

INTERPRETATION OF PART II

Amendments made:No. 16, in page 19, line 46, leave out `and'.

No. 17 in page 19, line 47, at end insert ';and
the port of Tilbury" means the Port Authority's docks and landing places (both within the meaning given by section 2(1) of the Port of London Act 1968) at Tilbury in the borough of Thurrock in the county of Essex.'.—[Mr. McLoughlin.]

Clause 29

PROVISIONS SUPPLEMENTARY TO SECTIONS 26 TO 28

Amendment proposed:No. 18, in page 22, line 32, leave out from 'areas' to end of line 33 and insert
`inside the limts within which the authority's statutory powers and duties as a harbour authority are exercisable'.—[Mr. McLoughlin.]

Mr. Wallace: This amendment is the Minister's response to an undertaking that he gave in Committee to return to the House with an amendment that would clarify the extent of the harbour authorities' areas with regard to matters contained in this clause.
The potential problem arises because, under the Pilotage Act 1987 there are some matters that come within the ambit of the harbour authority, but only for the purposes of pilotage. In Committee, I tabled an amendment to clarify the point that for the purposes of this provision we should concern ourselves only with traditional harbour areas, not those covered by pilotage. Does the Minister think that this amendment clarifies that matter? It seems that the situation is left open, at least to some extent. Perhaps I should reverse the tables and suggest that he go away, consider the matter, and have the amendment that I tabled originally introduced in another place. I think that it clarified the situation more successfully than would any words from him. The Secretary of State will be actively involved in any decision under this provision. If the Minister can give the House an assurance that the legislation covers only the harbour area, not the area relating to pilotage, it may suffice.

Mr. McLoughlin: I can confirm that this amendment arises from the undertaking given in Committee to consider an amendment tabled by the hon. Member for Orkney and Shetland. The hon. Member's concern was to clarify whether the transfer provisions of part Ill of the Bill would apply to navigational aids in areas where a harbour authority had pilotage jurisdiction extending beyond its limits for other harbour purposes.
This question has raised unexpectedly complex legal issues. They have been discussed with advisers of the British Ports Federation, which originally raised the matter. I shall not attempt to burden the House with the legal arguments involved. The amendment is intended to reassure the British Ports Federation that the provisions of part III are aimed only at navigational aids currently provided by the general lighthouse authorities within—for want of a better term—normal harbour limits. I can also give an assurance that, quite apart from this amendment, there is no intention that any transfers of aids to harbour authorities will be made in areas where such authorities have pilotage-only functions. We accept that, as a general rule, navigational aids in pilotage-only areas will have some recognisable element of general navigational usage. In those circumstances, such aids should continue to be the responsibility of the general lighthouse authority.
I hope that that assurance satisfies the hon. Gentleman. If there is a problem, I shall be happy to look into it in greater depth.

Amendment agreed to.

Clause 32

ORDERS AND REGULATIONS

Amendments made:No. 37, in page 23,1ine 28, leave out 'or 16' and insert
'16 or (Supplementary and consequential provisions relating to levy under section 16)(1)'.

No.19, in page 23, line 30, at end insert—
'(2A) No order to which this subsection applies shall be made unless a draft of the instrument containing the order has been laid before, and approved by a resolution of, each House of Parliament.
(2B) Subsection (2A) above applies to an order which is made—

(a) under subsection (7) of section 8 above as that subsection applies in relation to a scheme submitted under section 9 above;
(b) under section 11(8) above;
(c) under subsection (7) of section 19 above confirming a scheme submitted under subsection (1) of that section in pursuance of a direction under section 23(3) above;or
(d) under section 19(8) above.'.—[Mr. McLoughlin.]

No. 75, in page 23, line 31, leave out subsection (3).—[Mr. Barry Field.]

No. 76, in page 23, line 39, at end insert—
`( ) If, apart from the provisions of the subsection, the draft of an order to which subsection (2A) above applies would be treated for the purposes of the Standing Orders of either House of Parliament as a hybrid instrument it shall proceed in that House as if it were not such an instrument.'.—[Mr. Barry Field.]

Clause 35

GENERAL INTERPRETATION

Amendments made:No. 22, in page 24, line 5, at end insert—
' "equity share capital" has the meaning given by section 744 of the Companies Act 1985;'.

No. 23, in page 24, line 20, leave out 'References in this Act' and insert
'In this Act—



(a) references, in relation to any company, to maximising participation by employees of the company in ownership of its equity share capital are references to—

(i) securing the disposal to managers or other persons employed by the company of the whole or a substantial part of its equity share capital; and
(ii) securing that the persons to whom any such disposal is made comprise the greatest possible number of managers or other persons so employed; and

(b) references'.—[Mr. Loughton.]

Schedule 1

SUPPLEMENTARY PROVISIONS WITH RESPECT TO TRANSFERS UNDER SECTION 2

Ms. Walley: I beg to move amendment No. 48, in page 26, line 19, at end insert:
'The scheme of transfer under section (2) of this Act shall contain provisions for the setting up of mirror image pension schemes identical in all ways to any scheme operated by or funded in whole or in part by that authority. The amount being transferred in bulk from one scheme to another is to be the amount held in respect of each member's accrued pension benefits, allowing for expected future pay increases. Any existing accrued benefit in the scheme prior to transfer must be retained in the new scheme for the lifetime of that scheme. Bulk transfers without consent should be conditional upon the actuary to the transferring scheme supplying a certificate of broad equivalence. Pensionable service shall be regarded as not having terminated in any change of scheme.'.
As it is very late, and as the House has further business to dispose of, I shall be brief.
It is always easy to be wise after the event. I should like to draw to the Minister's attention the situation that arose from previous privatisations and the concern that was expressed about pension rights.
The Minister said in Committee that all the rights and liabilities of the authority and of the employees would be transferred and would continue after privatisation. He also said that that would not need to be spelt out specifically in the Bill. Our amendment seeks the assurance that the principle of safeguarding pension rights will be adhered to; it is important to obtain that assurance from the Minister.
Current good practice, outlined by the Department of Social Security'in "Protecting Pensions", must be endorsed by the Minister. There must be a Government commitment for the purposes of the Ports Bill. That is the intention of amendment No. 48. In principle, the amount evaluated for the past service reserve should be the sum that the trustees of any necessary identical scheme require to cover the cost of setting up, for the members concerned, pension credits for past pensionable service equal to each member's past pensionable service benefits in the paying scheme, allowing for rights and expectations based on eventual pay.
Any existing surplus funds in a pension scheme should be used solely for pensions to the workers. It is important that they should not be seen as a spare asset base to induce privatisation; nor should they be used by a port authority before transfer to the company.
I should welcome the Minister's reassurance that a watertight provision in any transfer will effectively be included in the Bill.

Mr. McLoughlin: I accept that the amendment is well intentioned, but it is unnecessary. As some hon. Members will be aware. the transfer of undertakings regulations do not apply to occupational pension schemes. The rights and liabilities of the port authority in relation to pension schemes would, however, be transferred to the successor company, along with other rights and liabilities, by virtue of clause 2(2) of the Bill. This would include, for example, any liability of the company to its employees or to the trustees of a pension scheme to make contributions to the scheme, and in any case where a pension was payable by the port authority itself out of revenue, as distinct from payment out of a funded pension scheme, the transfer of liabilities to the company under clause 2(2) would include a transfer of liability to pay the pension.
In short, after the transfer date, employees would have the same rights in relation to pensions against the successor company and any pension scheme as they have against the port authority and any pension scheme immediately before the transfer date. There will be no need to set up new pension schemes or to provide for bulk transfer from old schemes to new schemes. That sort of thing may happen where a predecessor undertaking is split up into two or more undertakings, but it is quite unnecessary in cases where the whole of an undertaking and its employees are transferred from one predecessor body to one successor body.
I understand the hon. Lady's concern. We have, however, dealt in the Bill with the difficulty over Tilbury. I can therefore reassure her that there is no need to pursue the amendment.

Ms. Walley: I have listened carefully to the Minister and I note his reassurance. I must, however, reiterate how important this issue was in previous legislation. It remains an important issue. If such a provision is not to be written on to the face of the Bill, we shall have to make sure that the Minister honours the commitment that he has just given the House on this most important issue of pensions. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 2

GENERAL SUPPLEMENTARY PROVISIONS WITH RESPECT TO TRANSFER UNDER SECTION 19

Amendment made:No. 24, in page 30, line 28, leave out
'Port Authority or the company (as the case may be)' and insert `company;'.—[Mr. McLoughlin.]

Motion made, and Question proposed, That the Bill be now read the Third time.—[Mr. McLoughlin.]

Mr. Bell: I am glad that there is to be a short Third Reading debate on this important Bill. It has been in the offing for about three years— from the time that the right hon. Member for Southend, West (Mr. Channon) was Secretary of State for Transport. He asked the ports to take the private Bill route, thus corrupting the entire private Bill route in the House of Commons. He brought it into disrepute and, no doubt, into abandonment. after the charade we witnessed with the Tees and Hartlepool Port Authority Bill and the Clyde Port Authority Bill.
We welcome the day's work because the Report stage has been constructive. We have seen realised many of the Minister's promises in Committee, which were not forced

out of him, but brought out of him by persuasion. He listened to the arguments of Labour and Liberal Democrat Members. The Bill has been enlarged tonight to extend to the management buy-out concept. When the right hon. Member for Southend, West raised the issue of privatisation, it was not privatisation through a management buy-out that included worker participation.
The original scheme for Tees and Hartlepool was a glorified management buy-out which had nothing to do with worker participation. There was no original scheme for employee participation at a time when the dock labour scheme had been abolished and the Tees and Hartlepool authority could not get rid of its staff quickly enough, though they had invested their lives in the docks. As a result of parliamentary pressure in the Chamber and in Committee, the Government increasingly accepted the principle that if there was to be a management buy-out of our trust ports as a result of the Bill, it had to extend to the workers who had invested their lives in the docks. This has been a good day's work.
The levy provisions have also been disentangled. They caused great anxiety and embarrassment to the Government in Committee. We have missed from our proceedings the hon. Member for Thurrock (Mr. Janman). He is engaged on a Select Committee that has sat until 12.30 am and may not even be sitting in this country. We have missed the hon. Gentleman's pure Thatcherite views of what a port should be. I am sure that his, no doubt inevitable, absence, which may not be astonishing to his voters, will be a source of embarrassment to him when it comes to the attention of his constituents.
The affirmative resolution procedure has been brought into play throughout the Bill. Again, that came from pressure in Committee, which was welcomed by the Opposition. On a variety of occasions, we had sought to extend the Bill to cover local democracy and local trade unions. We now have provision for an affirmative resolution in the House.
We know about the massive assets. The Government have consistently underplayed the money that will come to the state. There is the 50 per cent. about which we talked, then the 17·5 per cent. capital gain and the land tax—the levy—to which my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) referred, in which the Treasury, with its eyes lighting up, has seen the pot of gold. My hon. Friend the Member for Aberdeen, North (Mr. Hughes) warned the House that the Bill will not stop at ports with a turnover of more than £5 million, but will continue with ports such as Peterhead which has a turnover of £1·5 million.
Clearly, the Bill is an ideological measure, although not in the pure Thatcherite sense. If it were, the ports would have been privatised in one fell swoop. The principles of the hon. Member for Great Yarmouth (Mr Carttiss) would also have been brought into effect. We have seen the dilution of the ideological concept of privatisation, with the extension over two years and the coercion principle. The Treasury will then get its hands on the assets—the pots of gold—which it has found in our ports.
It is not a dignified exercise for a Conservative Government. The House and the country would have accepted a straightforward ideological commitment to privatisation, but the grubby hands of the Treasury extending into the pots of gold, getting money for the


Treasury to lull us, possibly in terms of income tax as has been suggested by my hon. Friend the Member for Kingston upon Hull, East, is an unseemly exercise.
The original concept of the right hon. Member for Southend, West was the privatisation of ports that wished to be privatised. In the Bill, there are the principles of coercion and compulsion. We are a long way from the idea that ports can be privatised in the national interest and in the interests of the ports themselves. The exercise began as privatisation with the support of management in ports throughout the country. We now see anxiety and quivers of fear in those management boards that they will be privatised, that they will go to the largest bidder on a competitive tender and that, eventually, the local community and the management of the ports will lose out.
The Bill does not extend to Northern Ireland, although it will do so eventually through other provisions. The port of Belfast will be a candidate for privatisation. Having visited that port and seen the work force, the docks, the turnover and the work that is done, I know also the anxiety that some third party not related to docks works will come along.
While the Opposition have much improved the Bill by our constructive work in Committee and while the Government have accepted our suggestions, it is nevertheless a shoddy piece of legislation. It is not dignified for a Government who believe in privatisation to introduce a Bill which is essentially a Finance Bill by another name and which does not privatise the ports as the Government might have wished. The Government, in short, should be ashamed of themselves for this piece of legislation and that is why the Opposition will oppose it.

Mr. Ward: I wish briefly to explain why I feel obliged to vote against Third Reading.
I object to clause 9, which introduces the compulsion element. I have said before, and I make no apology for doing so again, that I fully appreciate the need for privatisation in many cases, but here the principles of local democracy and freedom of choice are being overridden. All the constituents who have spoken or written to me about the Ports Bill have expressed their opposition to it. Poole harbour is unique; my constituents feel, quite rightly, that the Government have failed to recognise this in the preparation of the Bill and that every means should be used to maintain the present regime, which has been so successful.
I should explain the range of people who have expressed their concern about the Bill. The list includes local authorities, dockers, fishermen, conservationists, wildfowlers, yachtsmen and, perhaps most important, ordinary people who are concerned about the future of the greatest natural asset that a town like Poole could have. There is particular concern that, if the harbour were to be privatised, commercial operations or asset strippers would not leave it as it is today. There has been one well-publicised approach already.
Perhaps local feelings are best summed up in the words written to me by a constituent who is a former Poole harbourmaster:
During 40 years in port administration, I have held a senior post in ports of all sizes and peculiarities, but none so complex as Poole. Here the activities and interests stretch

from highly concentrated commercial traffic to bird sanctuaries and nature conservation areas and every conceivable activity and sport in between, each requiring a different understanding and approach, but all ultimately coming under the umbrella of the harbour Commissioners.
The pressures arising from the desire for profitability and share-holding dividends, expenditure and cash flow would almost certainly result in some activities and usages being developed at the expense of others and once the present situation is upset it would be impossible to restore it.
The House will also know that the largest onshore oilfield in the United Kingdom lies under Poole harbour and the House will shortly be asked to consider a Bill to allow the construction of an island in Poole bay to act as a platform for oil recovery. This project will need careful control, especially during the construction period, to ensure that the local environment is protected and that there is a minimum risk of interference with fishing grounds. At present, it is envisaged that the harbour commissioners will play a significant role in the control of these activities, and their role is written into the private Bill. Local people have confidence in the harbour commissioners' ability to carry out this function on their behalf. They are less convinced that any private operator would protect local interests as well as the harbour commissioners, who are all local people responsible to local organisations.
I know that the Minister will say that the Ports Bill is an enabling measure and that the Secretary of State might not require a privatisation scheme to be put forward after local consultation. It is all very well for the present Ministers to say that, but we do not know, and they do not know, what their successors' views might be.
I have made every effort to persuade the Government to make changes to the Bill. I spoke at length on Second Reading and I have had discussions with Ministers, including the Prime Minister, to impress on them the strength of opposition in Poole to the idea of privatising the harbour.
The Minister for Shipping visited Poole on 20 March and saw the situation there for himself. I am sure that he would acknowledge that he left for London in no doubt whatsoever of the views of the people that he met that day. The Minister was also kind enough to agree to a meeting with representatives of local fishermen in London yesterday, and again they expressed their views forcefully and clearly.
I have appealed to the Secretary of State for the Environment because of local concern about the environment. He has recently called in a decision to allow house building on 17 acres of land in Poole. I have explained to him that people in my constituency cannot understand why he is not just as concerned about the possible privatisation of Poole harbour, which comprises 10,000 acres of natural harbour and only 50 acres of commercial port.
I have also tabled amendments in an attempt to remove from the Bill the element of compulsion. I am grateful to my hon. Friend the Minister for his acceptance of one of my amendments, which proposed that, if Ministers have considered the case for compelling a port to privatise and have decided against doing so, there should be a five-year moratorium before they can return to the question of compulsion. Nevertheless, the compulsion element remains. That is unacceptable to my constituents, and I shall be forced to vote against the Bill.

Mr. Loyden: From the outset, those of us who understand the port transport industry have regarded the Bill as a retrograde step. I worked for 28 years in port transport, and I suggest that that gives me some understanding of the industry whose fate will eventually be decided by the Government.
I do not think that the Government have got it right. Their intervention in this matter defies all the laws of the industry's development. One need only look at the ports that will be affected. I listened carefully to the speech by the hon. Member for Poole (Mr. Ward), whose remarks showed how people feel about the way in which the Government are proceeding on purely ideological and doctrinaire grounds.
The Government have given us no evidence, in Committee or on Report, to suggest that they understand the present or future position of the ports industry. Communities will express grave concern about the Bill and the Government will reap the whirlwind following the decisions that they have made.
In Committee, the Government conceded a number of points, and their concessions may well make the Bill more acceptable. Nevertheless, the basic principle behind the Bill is doctrinaire. The Bill is not about the ports industry but about the Government's insistence, on ideological grounds, on proceeding with the privatisation of all those industries whose nationalised status they believe stands in the way of their political ideas.
That is a condemnation of the Government. They have not taken into account the interests of an industry that has been responsible for the development of the nation's economy. We are an island nation and we depend on the ports industry and on the industries linked to it. It is extraordinary that the Government should now see fit to treat the ports industry in such a cavalier fashion. I believe that they will pay the price for that, and that if they were prepared to put the proposals to the electorate, they would be roundly rejected.
There is no evidence to suggest that the Government have had regard to the present or future of the ports industry. It is clear that the Government's doctrinaire attitude has superseded all other considerations in the port industry. They have already made grave mistakes on the port industry. As an island nation, we are dependent now and shall be in the longer term on the ports of this country. A grave error has been made. Realisation of that will quickly come about. If the Government cared about the ports industry, they would listen to the voice of the people who work in the industry and those who have managed our ports to the benefit of the economy over the years. If they had done that, they certainly would not have introduced this Bill.

Mr. Nicholls: As my right hon. and hon. Friends know, on Second Reading I expressed several worries about the Bill, although I said that I fully supported the policy behind it—as I still do. It would be wrong, in the minute or so for which I intend to detain the House, if I did not say how grateful I am to my hon. Friend the Minister for Shipping and Public Transport for the hearings that he gave me throughout the proceedings on the Bill and the courtesy with which he treated me when I put various

points to him. I am extremely grateful to him for addressing all the points, even if at times he did not address them in exactly the way that I had in mind.
There was never a Bill that was not improved by the processes of discussion with colleagues and consideration in Committee. It is all too easy in such proceedings for Ministers merely to stick to the position that they have adopted throughout and not to be prepared to listen. My hon. Friend the Minister has made it clear throughout that he was prepared to listen. Sometimes he was prepared to agree and sometimes he disagreed. The point is that he was prepared to enter into a dialogue with hon. Members on both sides of the House. He deserves my gratitude and that of the whole House.

Mr. Spearing: When I came to the House as the Member for my present constituency, there were 10 miles of deep water quays in the royal docks. There have been no ships for the past few years. The last ship left with a cargo of 20,000 tonnes, and now aeroplanes fly where ships were moored.
The best thing that I can say about the Bill and those who have promoted it is that the three Ministers involved had the courtesy to be here tonight to listen to what we have to say. The Bill marks the nadir of the Government's record of smashing the combination of public ownership and private enterprise that was initiated by the House as long ago as 1909, when the Port of London authority was founded. It was a public framework within which private enterprise and competition could work. It represented the coming together of London in the civic sense that was highly appreciated at the time.
Differing economic views and practicalities are such that the authority is being taken apart by the Bill. It is perhaps no coincidence that the motto of the Port of London authority was "Floreat imperii portus", which means "Let the imperial port flourish." But there is no imperialism now. There is only a sense—and hardly that—of pride in our citizenship of the United Kingdom. As I said in my speech, I do not see any way in which the port of London can be sustained against the ports of northern Europe once the channel tunnel is opened, at least, not within the framework of the Bill.
The Port of London authority had its bad side. It was a lineal descendant of the East India Company, and had all the defects of that company. But its public enterprise, during both the inter-war and the immediate post-war periods, were the authority's high spots, particularly when the scheme worked well.
The House, indeed the public, and still less the Government, does not understand the difficulties of labour in the port industry. In the words of Mr. Churchill when he spoke in the House on wages councils:
The good employer will be driven out by the bad, and the bad employer will be driven out by the worst.
That is true of port labour. It is almost impossible to understand the feelings of some of my constituents who went to the royal docks only about five years ago on a Monday morning to find that their firm had disappeared. Yes, the offices were locked and the firm had gone into liquidation overnight. Alas, that happens in industry today, but it was not the sort of thing that was endemic in the port industry even a few years ago.
The docks and the port of London, as Britain's greatest port, have seen dramas of labour relations and of feeding


our great city. The number of workers in the port is probably down to 2,000 or 2,500 at most. It is difficult to compile figures now that the port worker classification has disappeared.
The river highway remains. I hope that the port of Tilbury will not advance up and down stream, as I fear part of the Bill will encourage it to do. If anybody wishes to buy it in these competitive days, and if it ever comes into being, I hope that it will not be bought or controlled from abroad. It would be bad if the port installation of London, or what remains of it, was controlled from another part of the world.
I fear that the Bill has arisen because the Government have no civic sense, or no sense of the fact that public ownership has a part to play and is not to be derided just for the sake of it. Above all, if the provisions of the Bill are carried out, we in London who prized our port authority, which was established by legislation enacted in 1909, will mourn its passing.

Mr. Richard Holt: As the sponsor of the Tees and Hartlepool Port Authority Bill, I have deliberately refrained from participation in the debate on this Bill until now. I have only been prompted to speak by the contribution of the hon. Member for Middlesbrougth (Mr. Bell).
Perhaps it is worth recalling for the House that we are four days short of the 20th anniversary of the first occasion that I can find when a trust port was privatised. The port of Liverpool was bankrupt and the Government of the day had to privatise it to keep the jobs and to keep the port open. The Hansardrecords of the debate are available but, because of the late hour, I will not go into them. What we have today is only a continuation of a policy first enacted 20 years ago.
The Ports Bill is not a shoddy Bill, as it was called, but a very good Bill, because it will enable our ports, at long last, to compete on all fours and fairly with ports on the continent which are privately owned and which move ahead, to their advantage and to our disadvantage.
In regard to the Tees and Hartlepool Port Authority Bill, the chief executive of that authority, Mr. John Hackney, came in for a great deal of unfair and unwarranted criticism by hon. Members who ought to have known better and who are not here for the Third Reading. Mr. Hackney is a man of great integrity. An apology is long overdue to him from Opposition Members who criticised him for the crime of wanting to make his port the biggest, the best and the first in the country. If that is a crime for a chief executive, would that more chief executives were guilty of that crime.
The Tees and Hartlepool Port Authority Bill would have been the first privatisation measure on the statute book, had it not been for the capriciousness of the way in which our legislation is enacted. Five Members of the other House were allowed to throw out a Bill which had been successfuly through five Divisions in this House and which was supported in the Division Lobby by the Prime Minister. It would be almost unbelievable to people in legislatures all over the world that five capricious Lords can make a decision against the will of the House of Commons.
I have heard Opposition Members talk about privatisation of ports being dogma of the Conservative party. Surely nationalisation was dogma of the Labour party. In that context, all political parties have dogma; that is why we are in political parties.
Tees and Hartlepool port authority was cheated out of its advantage by the actions of the other place. As soon as the Ports Bill is on the statute book, Tees and Hartlepool port authority will be proud once again to be first in line for privatisation.

Mr. Wallace: This evening's debates have been useful, and the Bill that will leave the House for another place this evening is better than the one that was introduced and given a Second Reading in January.
The three improvements that have been made are: first, the assistance given to enable management and employer buy-outs; secondly, the affirmative orders that the Minister has added to the Bill; and thirdly, the concession that he made to the hon. Member for Poole (Mr. Ward) on the stabilising of trust ports, which he has agreed not to privatise for five years so that there is no blight on further development.
Nevertheless, my right hon. and hon. Friends will have a fundamental objection to the compulsory element of the Bill that empowers the Secretary of State to compel trust ports, against their will, to undertake measures to enter the private sector when such a move is against the collective view of the ports' management. It will necessarily also be against the interests of the community.
I do not object to the part of the Bill that enables those trust ports who so wish to be privatised. The experience of the Tees and Hartlepool Port Authority Bill and the Clyde Port Authority Bill suggests that the private bill procedure is cumbersome and does not allow promoters readily to do as they wish. The blockage is often caused by another Bill in the pipeline that has nothing to do with that private Bill.
Hon. Members have made numerous attempts to highlight the problems in particular ports. The hon. Members for Blyth Valley (Mr. Campbell) and for Poole (Mr. Ward) spoke about the problems of the ports in their areas, and the hon. Member for Aberdeen, North (Mr. Hughes) and my hon. Friend for Gordon (Mr. Bruce) spoke about the problems of the port of Aberdeen. I have often tried to persuade the Minister that Lerwick harbour trust, because of circumstances there, should not be compelled to be privatised if the trustees do not wish. At present, neither the trustees nor the community want it to be privatised.
The Minister asks us to accept that he will consider all those ports. By now, he recognises that they all have different qualities and facets and that he cannot treat them in a blanket fashion. I welcome the fact that he will visit Lerwick in June. I am sure that he will be impressed by what he sees and will accept that there are compelling arguments why it should not be privatised.
The Minister has asked us to trust him to make that judgment; he has responded positively and followed up the commitments that he made in Committee. That may cause us to believe that he will approach the matter in good faith. Nevertheless, that can be no substitute for not having those provisions in the Bill. The hon. Member for Poole (Mr. Ward) expressed that point well, and there is no need


to duplicate his argument. For the reasons he gave, my right hon. and hon. Friends will vote against Third Reading.

Mr. Barry Field: The Bill is a modernising measure and will enable the management structure of trust ports, their general structure and their competitiveness to move into the 1990s.
I agree with the remarks of my hon. Friend the Member for Langbaurgh (Mr. Holt), as he and I shared responsibility for the Tees and Hartlepool Bill. It was a matter of great regret that it did not succeed in the other place.
I regret that my right hon. Friend the Secretary of State did not take the opportunity to turn up the wick under municipal ports and encouraging them to be privatised, but I perceive among the small ports a stirring of interest in the Bill and the fact that it will enable them to pursue privatisation, although they originally set their caps against it. There is a flood tide of interest in the Bill by ports throughout the United Kingdom.
The Bill will bode well for us in the future as we approach 1992. Taken together with the recent recommendations for the modernisation of bills of lading, I am sure that our maritime heritage will once again be competitive in Europe. I hope that my hon. Friend the Minister for Shipping will ensure that his name is permanently etched on the maritime history of our great nation by putting forward one more measure: the abolition of light dues. That is a necessary procedure to ensure that we have the most competitive port authorities in Europe.
I hope that my hon. Friend the Minister will respond to the General Council of British Shipping and modernise the appeal procedure, which he referred to on Report. He will know that I initiated the first inquiry when the liberalising measure that passed through the House was misinterpreted by the Portsmouth port authority, when it endeavoured to charge the Isle of Wight ferries for pilotage exemption certificates. It was the first time in the history of our nation that an offshore island was charged for setting foot on the mainland of its native kingdom.
We were successful because of the decision of the Secretary of State for Transport, but the procedure is cumbersome. I hope that a binding arbitration system will be introduced that will be more agreeable and more easily used by small shipowners. The experience in Portsmouth and in the Humber of the General Council of British Shipping is that the present systems are arcane and tilted towards the lawyers.
The Bill has taken a tortuous but enjoyable route because of the responses of my hon. Friend the Minister for Shipping to the many arguments that have been advanced. He has listened to all the arguments and responded to many of them in a most agreeable way.

Ms. Walley: The Bill's passage through the House has been tortuous. On Second Reading, we were as opposed to clause 9 and all the elements of compulsion that have been referred to this evening as we are now. Some gains have been made, however. For example, the Minister has given assurances on the affirmative resolution procedure, but he has done nothing to allay the genuine fears of the small ports. I only wish that he would visit them all and talk to those who represent them.
It is clear that the Minister is concerned with the money that the Treasury will receive following the Bill's enactment. My hon. Friend the Member for Middlesbrough (Mr. Bell) summed up what the Bill is about when he said at the outset that it is a Finance Bill by another name. That is exactly what it is. The guns are coming out, but it is clear that there are some Conservative Members who have close associations with trust ports in their constituencies who know only too well that the Bill will destroy the trust that has been built up in the ports over many years. I congratulate the hon. Member for Poole (Mr. Ward) on making a statement that caused the debate to come alive. It is clear that he is concerned about the abandonment of local democracy and the consequences that the Bill will have for Poole.
My hon. Friend the Member for Liverpool, Garston (Mr. Loyden) talked about the Government's doctrinaire attitude. Unlike the Government, we are committed to taking on board the views of all those in the industry. I give a firm commitment to the House and to all those who have been reading the reports of our debates on the Bill as it follows its stormy passage through the House that we shall undertake full consultations and listen to what those in the industry have to say.
Some amendments on employee share ownership plans were tabled, but was only lip service paid to them? Will it be possible for all the ports that wish to go ahead with ESOPs to take that course? Will that be possible when we do not have a 100 per cent. levy? I am sad that we did not have an opportunity to discuss on Report the amendments bearing on the environment which we debated in detail in Committee. Other privatisation measures have created precedents for key issues of environmental protection to be weaved into the Bill. Unfortunately, that has not happened in this instance.
It is extraordinary that, only a month after the now dismembered Nature Conservancy Council produced a major report on estuaries and spelt out the damage that is being done—we heard graphically about what is happening in Poole, for example—the Government have ruled out the idea of conducting an environmental assessment with a view to providing the environmental protection that is urgently needed.
The Tees and Hartlepool Port Authority Bill suffered a stormy passage in the other place, and the references to that measure today have shown the inconsistencies in the Government's policies, especially in their proposed methods of sale and their avowed intention to go ahead with competitive tendering. Indeed, there are inconsistencies and double standards throughout their legislation. As I saw the Minister for Health seated on the Government Front Bench, I thought of the way in which trust ports are being privatised and compulsorily sold off, in tandem with hospital trusts being set up, in, so the Government say, the best interests of the NHS.
The Ports Bill does not provide the nation with a transport strategy which links port and other investment within the national infrastructure. For what kind of transport policy can we hope? It was made clear at Question Time yesterday that there is a transport crisis in London. Added to the crisis on the roads and rail, we shall have a crisis in the ports once the Bill is in operation. At the same time as going full steam ahead with selling off our ports, the Government should come clean and admit that they have abandoned all intentions of having a transport


policy. They are putting the dogma of the marketplace and short-term financial gain in the place of an integrated transport policy.

Mr. McLoughlin: The hon. Member for Stoke-on-Trent, North (Ms. Walley) highlighted the difference of philosophy that exists between hon. Members on the Government and Opposition Benches. We view this as an important Bill for the ports in view of the contribution that they make to the economy and the nation as a whole. The measure marks a further stage in the Government's long-term strategy of progressively opening up the ports industry to market forces. It builds on the obvious benefits to the ports industry and the nation at large of the abolition of the dock labour scheme, which was opposed by the Opposition in 1989.
We look forward to many trust ports coming forward to become private companies. We also look forward to many of those who work in the trust ports playing a part in the success and future of those ports. Opposition Members would not give them that opportunity. We shall. I hope that Tees and Hartlepool will take advantage of the Bill.
I pay tribute, and express my thanks, to my officials for the help that they have given me during the passage of the Bill. I commend the measure to the House.

Question put,That the Bill be read the Third time:—

The House divided: Ayes 123, Noes 30.

Division No. 124]
[1.08 am


AYES


Alexander, Richard
Buck, Sir Antony


Alison, Rt Hon Michael
Burns, Simon


Amess, David
Burt, Alistair


Amos, Alan
Butterfill, John


Arbuthnot, James
Carrington, Matthew


Arnold, Jacques (Gravesham)
Carttiss, Michael


Arnold, Sir Thomas
Channon, Rt Hon Paul


Baker, Nicholas (Dorset N)
Chapman, Sydney


Bellingham, Henry
Chope, Christopher


Bennett, Nicholas (Pembroke)
Coombs, Anthony (Wyre F'rest)


Bevan, David Gilroy
Cope, Rt Hon John


Blaker, Rt Hon Sir Peter
Cran, James


Bonsor, Sir Nicholas
Currie, Mrs Edwina


Boscawen, Hon Robert
Davies, Q. (Stamf'd &amp; Spald'g)


Boswell, Tim
Davis, David (Boothferry)


Bottomley, Mrs Virginia
Day, Stephen


Bowden, Gerald (Dulwich)
Douglas-Hamilton, Lord James


Bowis, John
Dover, Den


Brandon-Bravo, Martin
Dunn, Bob


Brazier, Julian
Fallon, Michael


Bright, Graham
Field, Barry (Isle of Wight)


Browne, John (Winchester)
Forman, Nigel





Forsyth, Michael (Stirling)
Meyer, Sir Anthony


Freeman, Roger
Mills, Iain


French, Douglas
Morrison, Sir Charles


Gale, Roger
Nicholls, Patrick


Gill, Christopher
Norris, Steve


Goodhart, Sir Philip
Paice, James


Goodlad, Alastair
Patnick, Irvine


Greenway, John (Ryedale)
Rhodes James, Robert


Gregory, Conal
Rifkind, Rt Hon Malcolm


Ground, Patrick
Roberts, Sir Wyn (Conwy)


Hague, William
Rumbold, Rt Hon Mrs Angela


Hamilton, Hon Archie (Epsom)
Ryder, Rt Hon Richard


Hamilton, Neil (Tatton)
Sackville, Hon Tom


Hargreaves, Ken (Hyndburn)
Shaw, David (Dover)


Harris, David
Shaw, Sir Michael (Scarb')


Hawkins, Christopher
Shepherd, Colin (Hereford)


Heathcoat-Amory, David
Speller, Tony


Holt, Richard
Stanley, Rt Hon Sir John


Howarth, Alan (Strat'd-on-A)
Steen, Anthony


Howarth, G. (Cannock &amp; B'wd)
Stern, Michael


Howell, Rt Hon David (G'dford)
Stevens, Lewis


Hunter, Andrew
Stewart, Allan (Eastwood)


Irvine, Michael
Stewart, Andy (Sherwood)


Jack, Michael
Summerson, Hugo


Jackson, Robert
Taylor, John M (Solihull)


Jones, Gwilym (Cardiff N)
Thompson, Patrick (Norwich N)


Jones, Robert B (Herts W)
Trotter, Neville


King, Roger (B'ham N'thfield)
Twinn, Dr Ian


Knapman, Roger
Viggers, Peter


Knight, Greg (Derby North)
Walden, George


Knight, Dame Jill (Edgbaston)
Waller, Gary


Knowles, Michael
Warren, Kenneth


Lang, Rt Hon Ian
Watts, John


Lawrence, Ivan
Wells, Bowen


Lilley, Rt Hon Peter
Wheeler, Sir John


Lyell, Rt Hon Sir Nicholas
Widdecombe, Ann


MacKay, Andrew (E Berkshire)
Yeo, Tim


Maclean, David



McLoughlin, Patrick
Tellers for the Ayes:


Mans, Keith
Mr. Timothy Ward, and Mr. Timothy Kirkhope.


Maples, John



Maxwell-Hyslop, Robin





NOES


Barnes, Harry (Derbyshire NE)
Loyden, Eddie


Bell, Stuart
McKay, Allen (Barnsley West)


Campbell, Menzies (Fife NE)
Marshall, David (Shettleston)


Carlile, Alex (Mont'g)
Michael, Alun


Cryer, Bob
Nellist, Dave


Cunliffe, Lawrence
Pike, Peter L.


Dalyell, Tarn
Prescott, John


Dixon, Don
Quin, Ms Joyce


Doran, Frank
Skinner, Dennis


Fearn, Ronald
Spearing, Nigel


Foster, Derek
Wallace, James


Griffiths, Win (Bridgend)
Walley, Joan


Henderson, Doug
Ward, John


Hughes, John (Coventry NE)



Hughes, Robert (Aberdeen N)
Tellers for the Noes:


Hughes, Simon (Southwark)
Mr. Frank Haynes and Mr. Thomas McAvoy.


Lamond, James

Question accordingly agreed to.

Bill read the Third time, and passed.

Orders of the Day — Engineering Industry Training Board

The Parliamentary Under-Secretary of State for Employment (Mr. Robert Jackson): I beg to move,
That the draft Industrial Training Levy (Engineering Board) Order 1991, which was laid before this House on 21st March, be approved.
The proposals before the House seek authority for the engineering industry training board to raise a levy on employers in the engineering construction and steel erection industries, to finance the running costs of the board and to fund a range of training initiatives, including a grants scheme. The proposals do not relate to engineering manufacturing, as that part of the engineering industry will move to independent training arrangements around the middle of this year.
The basis of the proposals is a levy of 1·5 per cent. on the payroll of site employers in the industry, although no levy will be paid on the first £50,000. Additionally, there is a levy of 2 per cent. on all payments made by employers for sub-contract labour, and 1 per cent. on the payroll of head office establishments with more than 30 employees. Those head offices that train satisfactorily, however, will be exempt from all but a small, non-exemptible levy. Because of those provisions, 40 per cent. of firms will pay no levy at all, and a further 8 per cent. only a small amount towards the board's operating costs. The proposals have the support of the employers, as required by the Industrial Training Act 1982, and the full support of the board.
The House will know that the Government thought long and hard about their decision to retain statutory arrangements for those sectors of the EITB. In principle, we believe that independent, employer-led arrangements that have the full support of employers, offer the best way forward for industrial training. In general, the track record of compulsion through statutory levies in raising the quality and quantity of training is not a good one. The hon. Member for Fife, Central (Mr. McLeish) and I debated that aspect extensively some time ago, in connection with the construction industry training board, so I hope that it will not be necessary to go over that same ground this evening.
We have retained the statutory principle in the case of this part of the industry because of strong support from employers. The engineering construction industry has particular characteristics that create peculiar training problems. The mobile nature of its work force, both geographically and between employers, together with the large-scale use of sub-contracted and self-employed labour, produce a unique set of circumstances in this sector of the engineering industry. Let me explain and emphasise that we consulted widely with the industry about the EITB. There was a widespread and strongly held view that independent arrangements should be set up for engineering manufacturing, but that statutory arrangements needed to be retained for engineering construction.
We were persuaded to accept those proposals, and we intend laying an order before Parliament around the middle of the year that will remove engineering manufacturing from the scope of the EITB and define the boundaries of engineering construction. At the same time, the board will be renamed the engineering construction ITB to reflect that change.
We are concerned to ensure that statutory burdens on firms are kept to a minimum, and that firms that train appropriately are rewarded. To that end, we asked the new board to replace its head office exemption scheme by a voluntary code of practice based on the "investors in people" initiative, to raise the exclusion level for small firms and to review the effects of its grant scheme on employers' training. I am looking to the board to address these issues in 1991–92.
We intend to keep a close watching brief on the new board. Its powers to raise a levy will be exceptional, and the Government, like the House, must be convinced that they are absolutely necessary to preserve the basis of training in the engineering construction industry. The Government have decided, because of the peculiar nature of the industry, to continue with a statutory board for the time being.
The Government continue to believe, as we argued in the 1989 White Paper, that the most effective incentive for companies to train is a knowledge and understanding of the skill needs, not centralised regulation based on statutory powers.
I believe that it is right for 1991 that the House should approve the proposals before it, and I commend them.

Mr. Henry McLeish: I am conscious that Ministers would like to depart early, so we are considering the possibility of being reasonable this evening and providing that accommodation. However, it is only a tentative proposal at this stage.
I want to discuss the political impact of Prince Charles's speech on the Conservative party, but being a moderate and reasonable man, I will resist. Suffice it to say that I want to put on the record the fact that, while we may agree with his attack on the educational and curriculum aspects of what the Government have been doing, as a Scot and as a cynic, I take some exception to all of our children being exposed to both Shakespeare and Dickens, without a wider literary menu to select from. However, we should get down to this evening's business.
This order is important for a variety of reasons. The Minister has highlighted the technical and procedural elements that we are discussing. One important addition is that, for the first time, steel erectors will be included in the arc of the construction industry engineering board, which will be established later this year, when it takes up its formal responsibilities.
There are three other reasons why this order is important. First, the engineering industry training board, as we know it, will change and is changing. Only 40,000 employees will be covered, in relation to the statutory levy, by this order. Secondly, we have some worries about the effectiveness of the replacement organisations which will be established: the engineering training authority and the engineering construction industry training board.
Thirdly, the order almost brings to an end the dismantling of part of Britain's training infrastructure. We started with 23 training boards, which were reduced to seven. Then the construction industry put up a formidable fight, due to its influence within the Conservative party, to retain the construction industry training board. Now we are in the sad situation where, because of Government pressure and diktat, and bowing to the marketplace, the


engineering industry training board is being dismembered into two organisations to take up responsibility in different sectors.
I reiterate that this order goes well beyond being merely technical and procedural as regards the skills issue, which is climbing to the top of the political agenda. Far be it from me simply to accuse the Government of playing politics with the future of the engineering industry, but there are sceptics and cynics who believe that a Government so wedded to the idea of the market can at times be oblivious of the views of the industry, as was the case with the engineering industry training board, when views were offered and some were rejected. We now find that the engineering industry training board has put forwards its proposals, and there is great uncertainty about the two components that are being left to carry on the work.
As we are in the early hours, I shall put it succinctly. This order will result in a 50 per cent. cut in the budget of the new engineering training authority because, with the abolition of the levy, it will mean that its income will drop from about £15·7 million to £8 million, at a time when there is a debate in the United Kingdom about the volume of money that is being spent, the quality of it, and the qualifications that result from that spending.
There is a possibility that a large number of the supply-side initiatives documented in the recent engineering industry annual report will be abandoned. Sadly, where the statutory levy is dropped, the engineering training authority will no longer be able to budget for youth training.
It is remarkable to realise that, in 1968, there were 445,000 apprentices and other trainees in manufacturing industry. After 12 years of this Government, by 1990, the figure had dropped to 87,000. As a proportion of all employees in manufacturing, it has dropped from 5·6 per cent. in 1968 to about 1·7 per cent. These figures are shocking. They are a damning indictment of the Government's policies in relation to youth training. This is an implication of the order that should be treated very seriously.
I want to make a few points, to which I hope the Minister will respond. This order will apply only to the construction sector of the engineering industry training board. By July, we shall have two fully functioning alternative organisations. One is the engineering training authority, to which the Minister has referred; the other is the engineering construction industry training board. The ETA will be responsible for the training of 2 million employees in nearly 22,000 companies; the engineering construction industry training board will be responsible for 40,000 employees. The latter will have a statutory basis; the former will be subject to a voluntary regime.
The matters that concern us are easy to state. First, with regard to the future of the engineering construction industry training board, the levy is necessary. The board feels apprehensive. It is menaced, threatened, by the review that is to take place in 1992. The Minister could dispel its fears by agreeing with us that the review should be positive and that there should be certainty as to the board's future. But, more important, the Minister should underline the fact that training is a partnership between the training organisations and the Government. There is no room for

diktat or dogma. The Government should listen to the key experts who run the industry, and allow those people to judge what is best for them.
Secondly, there is the question of stability. The industry wants an assurance for the period beyond 1992. That could be secured by way of a statutory levy or a voluntary regime. We are fighting to close the skills gap between Britain and its European competitors, and stability in key sectors of our training infrastructure is crucial. This is a demand to which the Government should accede.
The third issue is that of assets. I hope that the Minister will assure the House that, with the demise of the engineering industry training board, there will be a coherent policy on assets. These should be distributed fairly between the two remaining authorities, and the most effective use should be made of what is a very substantial amount of money.
Fourthly, there is a relationship with the training and enterprise councils, which have become the flagship of the Government's training policy. We support the idea of local delivery and the work of the TECs. However, the engineering industry has expressed concern about the councils. The geographical balance can cut across the work of sectors. The Minister ought to reassure the sectors, including the engineering industry, that the role of the TECs will be complementary, that sector initiatives will have equal status, and that there must be dialogue, not only there but also with the Government. It is felt that no such assurance has yet been given.
Finally, I want to make yet again a point that has been made repeatedly by the Opposition. The Government seem to be obsessed with the idea that a levy must be bad if it is statutory, and that all these organisations must be intimidated into accepting a voluntary way forward. When we lag so far behind our competitors, when there are such skills gaps between the regions of Britain, and when there are such gaps between various sectors of industry, is it right to continue to dictate from the centre? The industry wants to be assured that the Government will not be dogmatic. That will take some doing.
In the engineering industry, we have the way to Britain's future. The matter cannot be taken lightly. The problems that the industry faces are immense. The issue which dominates its concern is how the Government, if they are still in power in two or three years' time, will respond to the view that the voluntary way, which has been tried for about 150 years, is not working.
The Opposition do not intend to oppose the order, however, we have welcomed this opportunity to highlight some of our concerns. I hope that the Minister will respond to them.

Mr. Lewis Stevens: I welcome the order. The engineering construction industry training board will have an important role to play. I welcome the fact that the Government accepted the recommendation that such a training board should be retained. Both employers and clients recognise the need, due to the peculiar nature of the industry, for a central organisation that can provide training for those working both on and offshore and for those involved in building power generation, oil, chemical and most other major processing plants.
An apprenticeship scheme already exists and is soundly based. Provision must also be made for the training of


supervisors and senior managers. An important point that is frequently overlooked is the need for the continuing education of senior engineers and management.
The hon. Member for Fife, Central (Mr. McLeish) referred to the training and enterprise councils. The national skills development scheme that is used by the industry has many advantages. People, either skilled or unskilled, can enter the industry at any age and receive training in particular trades. However, the TECs do not cater for this industry's needs; people cannot be drawn from wide areas and trained to cater for specific needs.
Unemployed people who require training could enter the engineering industry if money were ring-fenced specifically for people on ET in specific trades. There will also be a need for people to learn new skills. Refineries and offshore installations will have to be dismantled. Nuclear plants will also have to be decommissioned and dismantled. Specialist skills will be required and few people possess them. They will have to update their skills.
We shall also have to cope with demographic changes and with the need to compete for those leaving school and for graduates. The new board will, I believe, adopt the right approach and provide the necessary training so that the industry can cater for specific needs. As the Minister said, the work force is more mobile than is normally associated with engineering activities. When the industry is involved with large installations, a rapid growth in a particular skill is demanded. That means that there needs to be an ability to train many peope in a relatively short time to the level of competence that is required.
The House set up a structure that will perform that task. The order will provide a training system for the clients and for the people in the industry which will take them beyond the two years that they have at present well into the future. The order will ensure a basis of training that will make a great contribution to industries that are vital to those involved.

Mr. Richard Holt: I apologise to my hon. Friend the Minister for not being here at the beginning of his speech.
I want to make a point about the number of apprentices today. The decline in the number of apprentices began when there was a pincer movement with the raising of the school leaving age and the reduction of the age at which full pay was given. When the industry had young people for five years from the ages of 14 or 15 to 18 and 19, it had long enough to give proper apprenticeship and training. Today, when people cannot leave school until 16 and have to be paid full wages at 18, there is only 18 months in which to try to bring people into the industry.
I smiled to myself when I heard the hon. Member for Fife, Central (Mr. McLeish) talk about not wanting centralisation. That is what existed when we had a plethora of training boards. We had centralisation by the Government, which caused industry a great deal of wasted expenditure and which trained few people. The number of apprentices has declined and will continue to decline because that is the nature of things today.
The country could help to reverse the trend if it could get away from the position that I have been trying to bring to Ministers' attention for almost two decades. We should stop the artificial divide between education and training. The sooner we adopt the system in vogue on the continent

the better. We must recognise that people are different—that they have different aspirations, skills and abilities. We should cultivate education and training for them and we might then find ourselves in a position like that in France.
In France today, people can start an apprenticeship at 14. Some 12 per cent. of all youngsters in France follow that route. Some 23 per cent. follow the next route of super-apprentice, which starts at the age of 15. In that way, France has the apprenticeships, the training and the skills. The youngsters continue to have education at the same time—there is a mix of education and training.
Yet in this country, because of the way in which the law is framed, no youngster can embark on a City and Guilds or a Royal Society of Arts course, or on any other formal vocational qualifications, which are accepted and known throughout the industry, and we wonder why we lag behind those on the continent. We lag behind because, as someone said recently outside the House, those who theorise in education have said that if one attempts to keep youngsters in a building and is supposed to be teaching them something, one is giving a service to them. One is not. The youngsters would be far better served if they were allowed to undergo vocational training in a mix with education. That would help the problems of truancy, and pof law and order.
I hope that the Government, at long last, will begin to listen to the voices outside which have been saying that there is no need for the artificial divide in the engineering or in any other industry. We should get back to the recognition that all youngsters are not the same.
In France, by the time that youngsters reach the age at which they transfer from primary to secondary school, no fewer than 50 per cent. are not in the same year group in which they began their education at the age of five. Some 25 per cent. of them have accelerated by gaining a year, and 25 per cent. have slipped a year. The French see nothing wrong or unusual in that; it is the norm. In this country we should head in that direction so that, ultimately, we shall have a better educated and trained work force.
I commend what we are doing within the engineering industry because I think that it is an essential prerequisite, but I hope that wider points will also be looked at by my hon. Friend.

Mr. Jackson: Like the hon. Member for Fife, Central (Mr. McLeish) and my hon. Friend the Member for Nuneaton (Mr. Stevens), I and the Government agree about the importance of the engineering industry in general and the engineering construction industry in particular, which is the subject of our debate.
I remind the hon. Member for Fife, Central that we had an extensive debate in February on the construction industry training board—a very similar proposition—when the hon. Gentleman raised his concern about the Government policy that underlies these proposals in respect of levies. Hon. Members who wish to look this up can do so by consulting Hansard of 25 February, columns 755–69. I do not think we need go over that same ground again tonight. I agree with the hon. Member for Fife, Central, who did not dwell on that point.
The hon. Gentleman referred to cuts in the funding of engineering training, but I think that he gave a rather selective figure, because he omitted completely the income


coming to the new engineering training authority from voluntary subscriptions, and, indeed, the expenditure that will be undertaken by the engineering companies. We have lots of reasons to believe that that has substantially increased in recent years, along with an overall increase in expenditure by employers on training. The House might like to know that the Government's labour force surveys show that more and more people are receiving training. The numbers in training during the same four-week period increased by 85 per cent. between 1984 and 1990 and by 8 per cent. in the most recent year alone.
My hon. Friend the Member for Langbaurgh (Mr. Holt) put in perspective the points made by the hon. Member for Fife, Central about apprenticeships. I agree very much with him about the need to overcome the traditional divide between the academic and the vocational, between education and training. He may have seen the piece that I did on the subject in The House Magazine recently. I can assure him that his 20-year campaign on this subject will bear fruit. The Government have announced that there will be a White Paper shortly on the 16 to 19 age group, and when my hon. Friend reads that White Paper he will find that we are addressing this issue which he has been pressing so hard on us over the past 20 years.
The proposals before the House are, I emphasise, particular to the engineering construction industry. They do not represent a change in the Government's view that independent, employer-led and employer-supported arrangements are in general preferable to compulsion. The hon. Member for Fife, Central spoke about the 100 years of the voluntary system. I have to remind him—we covered this topic in the previous debate—that we had an extensive system of compulsion operating in this country for some 20 years down to the early 1980s, and it did not work very effectively. We believe, like most of the other countries that train effectively, that the best way is the voluntary way.
The hon. Gentleman asked me for some assurances about the review that we propose to have in due course to see how this system is operating and whether we should continue with it. I can certainly give the assurance that we will be open-minded in that review, and in that sense it will be the positive review that he seeks. Certainly we shall bear in mind what he says about the need for stability, but, on the other hand, we want to ensure that we have proposals that will work over the years ahead.
As my hon. Friend the Member for Nuneaton (Mr. Stevens) pointed out and as we recognise, the engineering construction industry is different from most, if not all, other industries and it therefore needs to be treated accordingly. The proposals before the House have the support of the employers in that industry. They have been approved by the board. That they should be approved by the House is not in dispute—the hon. Member for Fife, Central has said that he does not intend to divide the House. I therefore commend them to the House.

Question put and agreed to.

Resolved,
That the draft Industrial Training Levy (Engineering Board) Order 1991, which was laid before this House on 21st March, be approved.

Orders of the Day — Smoking

Motion made, and Question proposed,That this House do now adjourn.—[Mr. David Davis.]

Mr. Alan Amos: This debate is about three main issues: health, environmental protection and individual rights.
Not only is smoking dangerous to the health of non-smokers, but it is offensive in many other ways.
Loathsome to the eye, hateful to the nose, harmful to the brain, dangerous to the lungs, and in the black stinking fume thereof nearest resembling the horrible Stigian smoke of the pit that is bottomless.
That was said by King James I in 1604.
it is a shocking thing, blowing smoke out of our mouths into other people's mouths, eyes and noses, and having the same done to us.
That was said by Samuel Johnson in the 18th century.
To bring us a little closer to the present, in 1986 the World Health Organisation said on the health question:
Passive smoking violates the right to health of non-smokers, who must be protected against this noxious form of environmental pollution.
The problem is centuries old, and it is still with us.
I do not seek a ban on smoking as such. If smokers want to kill themselves, that is up to them. But if people have to smoke, let them do it in a designated area so that it does not cause danger to, or interfere with, the comfort and rights of the majority—the two thirds of the adult population who do not smoke, and who have the right to breathe in safe and clean air.
Let me state clearly that there is no need to spend much time reciting in detail the evidence that passive smoking—that is, breathing in other people's tobacco smoke—kills non-smokers. It is just over three years since the Froggatt report was published. That report stated that passive smoking kills several hundred smokers—through lung cancer—each year in the United Kingdom. Since then, the Government have repeatedly accepted the findings of that report. My hon. Friend the Minister for Public Transport, then Minister for Health, said in May 1989:
We believe that passive smoking … leads to several hundred deaths a year … the environment is being polluted by those who smoke in public places."—[Official Report,8 May 1989; Vol, 152, c. 614–84.]
Only recently, an excellent publication entitled "Passive Smoking—a Health Hazard" explained in detail the risks of passive smoking and recommended that action be taken to protect non-smokers. The report was drawn up by the Cancer Research Campaign, the Imperial Cancer Research Fund, the British Heart Foundation and the National Asthma Campaign among others. The list comprises 48 bodies—virtually all the eminent health, medical and scientific bodies in the country. The foreword says:
On the basis of a large body of research it can now be stated that passive smoking causes lung cancer in non-smokers and serious respiratory illness in babies. Passive smoking may also cause chronic middle-ear disease in children, and recent studies suggest an association between breathing other people's tobacco smoke and heart disease. In addition, passive smoking can aggravate existing illnesses such as asthma … risks of passive smoking are greater than those posed by any other indoor manmade pollutant released into the general environment. This information places a responsibility on employers, who need to safeguard the health of their employees; on those responsible for managing buildings and transport used by the public (and especially


those used by children); and on the Government. which has an overall duty to protect public health. Passive smoking is a hazard to health that can be prevented.
In gist, passive smoking is breathing in other people's tobacco smoke. Tobacco smoke is a cocktail of about 5,000 different chemicals, including carcinogens, irritants and poisonous gases. Smokers inhale the chemicals direct into their bodies as what is called mainstream smoke. Tobacco smoke in the air is about one fifth mainstream smoke, exhaled by smokers. A massive 85 per cent. is what is called sidestream smoke, which comes from the end of cigarettes or cigars between puffs. Sidestream smoke contains higher concentrations of many poisonous chemicals than does mainstream smoke. The collective results of more than 20 studies show that non-smokers living with smokers are between 10 and 30 per cent. more likely to get lung cancer than people living with others who are non-smokers.
Tellingly, if such a contaminant were incorporated into a new product today, it would he immediately banned. The effects on infants of parents who smoke—pregnant mothers in particular—are now well documented and I do not intend to list them in detail.
Only tobacco companies deny the overwhelming evidence on passive smoking. That is not surprising. They have the most to lose from the increasing number of restrictions on where and when people can smoke. The stakes for such companies are, indeed, enormous. The president of the tobacco multinational R. J. Reynolds has said of the anti-smoking measures:
If they cause every smoker to smoke just one less cigarette a day, our company will stand to lose $92 million in sales annually.
But they are not winning their battle, I am glad to say. In February this year, an Australian court ruled that the tobacco industry was not telling the truth by placing full-page newspaper advertisements which denied that there was any evidence of harm from passive smoking.
Almost everyone now accepts that passive smoking is a health hazard and that to smoke in public is downright anti-social. It is perhaps that anti-social aspect that makes many people very angry about being forced to breathe in other people's smoke. It is simply unpleasant and unacceptable to go home reeking of tobacco smoke after sitting in a restaurant, pub or some other public place. Why should the majority have to put up with it?
Some would have us believe that, if we attempted to restrict smoking, we would at the same time restrict smokers' liberty. But one man's liberty is another man's poison. If we are to talk about liberty and rights, I, as a Conservative, believe in the right not to be forced to breathe polluted air. After all, I am doing harm to no one by seeking clean air. But those who smoke fill the air with a cocktail of chemicals including ammonia, benzine, cyanide and formaldehyde.
As a non-smoker, Madam Deputy Speaker, I am not doing you any harm. If I smoke in your presence and near to you, I am endangering your health and I do not believe that I have the right to do that. Nor does anyone have the right to endanger anyone else's health.
I am pleased to say that many smokers accept the need for restrictions on smoking. A survey for the Consumers Association magazine Which Way to health? found a majority in favour of restrictions on smoking in all public places, such as public buildings, transport, shops, eating places and places of entertainment, except pubs. That majority included a large number of smokers. We are

beginning to see a shift towards the smoke-free society that 1 predicted in my previous Adjournment debate on this subject in January 1990.
Many United Kingdom employers, including Ford and the Metropolitan police, have introduced written policies on smoking. Public transport in London, with the exception of black cabs, is now smoke-free, following the ban on smoking on London buses introduced in February. That example is being followed in many other cities. Many airlines are introducing no-smoking rules, following the example of Air UK and Air Canada, which have banned smoking on all flights.
I was alarmed to find that the air on board a plane is recycled. That means that the little air nozzle above my head—which I always turned on for fresh air—pumps out carcinogens from the smoking to the non-smoking section. Surely that is proof enough that ventilation will not adequately deal with tobacco smoke. Indeed, one reason why legislation is needed is that voluntary methods, such as better air conditioning and ventilation, offer no solution to the problem.
The most effective air conditioning system can filter out nearly all smoke particles, but the gases will pass through the filters. Therefore, filtered smoky air recirculated by air conditioning will still contain poisonous and carcinogenic gases. A study carried out by Birmingham university reported on the concept of building sickness and the effects created among office workers of itchy eyes, stuffy noses and dry throats. Good air conditioning systems wholly filter the air, but they recirculate 80 to 90 per cent. of it, bringing the rest in from outside. Consequently, most office air will be recirculated many times before being replaced. The dilution of smoke in the air is therefore very low. Meeting the necessary standards may result in complaints about draughts and will certainly make buildings much more expensive to run.
Applying an effective system to whole buildings would be prohibitively expensive and still would not protect people sitting near smokers from the hazards of environmental tobacco smoke. As the report on passive smoking concluded:
Improved ventilation would not provide adequate safeguards against exposure to environmental tobacco smoke.
I congratulate the Department of Health on making clear statements that passive smoking does kill, but I press the Government to do even more. We are dealing with a significant health hazard. Passive smoking causes lung cancer as well as having a serious effect on the health of asthmatics and on young children in particular.
The Government have until now relied on airline operators, employers and others who control public places to take steps voluntarily to protect non-smokers' health, but those measures will go only as far as the tobacco industry will allow. We do not rely on voluntary measures to protect people from other hazards, such as asbestos or chemicals like formaldehyde in the air. Thanks to recent legislation, we do not rely on voluntary measures alone to ensure that our streets are kept clear of litter which is a public nuisance and not, like passive smoking, a health risk. We should not, therefore, rely on voluntary measures to ensure that our air is kept free from tobacco smoke.
The Government must agree that it makes sense and would be a popular move to introduce legislation making non-smoking the norm in society. That does not mean


banning smoking outright, as I made clear at the beginning of my comments, but it means giving precedence to the rights of the non-smoking majority.
One argument that we constantly hear against using legislation is that bans are unenforceable, yet such legislation works. The Netherlands, Ireland, Canada, Australia, New Zealand and the United States—all modern, western countries—have national or local laws that protect non-smokers. I have witnessed them in action—in New York of all places. Despite its being the last place on earth where one would expect people to accept any rules regarding personal behaviour, New Yorkers have responded readily. I am pleased to say that one cannot walk into any restaurant without being offered a seat at a non-smoking table.
In this country I know that laws on smoking would be welcomed and enforced. By making the protection of non-smokers a legal requirement, we would find a willing audience. Many employers and restaurant owners have stated that they would like to introduce smoking restrictions, but that they would prefer the Government to take a lead by making non-smoking a requirement under the law.
On the question of workplace practice, the Health and Safety at Work, etc. Act 1974 requires employers to provide a safe environment, free from risk to health and adequate for the welfare of employees. Under the Act, it is the duty of employers to do everything that is reasonably practicable to ensure the health, safety and welfare at work of their employees. In criminal law, by virtue of section 2(2)(e) of the legislation, employers must ensure that the working environment is safe, but the provision has no teeth when it comes to the dangers of environmental tobacco smoke. Measures have been introduced on the grounds of safety and hygiene rather than to avoid the health risks of passive smoking.
In this country there are, in effect, no legal restrictions on smoking to protect people from environmental tobacco smoke. Yet such measures are widespread throughout the civilised world—in the United States, Canada, Australia, Norway, Spain, Belgium and recently Ireland, to name just a few countries. Despite that, however, some progress cannot be prevented. Last year, a social security tribunal ruled that one woman's asthma attacks, brought on by environmental tobacco smoke at work, should be classed as an industrial accident and she was awarded a disability pension.
I am sure that getting legislation is just a matter of time. Events are moving our way. Until then, I want to help the Government take steps to protect non-smokers now. Therefore, I suggest a five-point plan which should be adopted as soon as possible. Each point can be carried out quickly and easily, and each would take us closer to making non-smoking the norm.
First, each Government Department should be given 12 months to introduce a formal written policy on smoking. That policy should make no smoking the norm in all Government buildings and should allow smoking only in separate, designated smoking areas. My right hon. Friend the Secretary of State for Health could take the lead, as his Department is most aware of the hazards of passive smoking.
Secondly, my right hon. Friend the Secretary of State for the Environment could take active steps towards complying with the terms of the European Community mixed resolution of 18 July 1989. It calls on member states to protect non-smokers' health and to report progress on doing so by July of this year.
Thirdly, the Health and Safety Executive can be instructed by my right hon. and learned Friend the Secretary of State for Employment to implement an active programme for employers and employees which ensures that, not only are the hazards of passive smoking widely publicised, but that a smoking policy to deal with the problem is forcefully advocated. I suggest that the Health and Safety Executive should be set a target of ensuring that more than half of all United Kingdom employers have a proper smoking policy within two years.
Fourthly, the House should set an example to the nation by returning to the Smoking Rooms. Those used to be—it was before my time—the only places where smoking was allowed but, sadly, that considerate practice is now ignored. We would send a clear signal to non-smokers and smokers alike if we accepted that one Member of Parliament should not pollute another.
Finally and most important, the Government should support the Bill that I shall introduce tomorrow. It will amend the existing Health and Safety at Work etc. Act 1974 to give every employee the right to a smoke-free working environment. It is a simple measure and will not force employers to adopt a particular policy. They will have the right to choose which policy would be best for them, but any employee who was exposed to tobacco smoke would have the backing of the law in getting a smoke-free working environment. Employers would no longer be able to ignore the pleas of non-smoking employees for smoke-free air.
I hope that my hon. Friend the Minister for Health will take note of each of those five points. I believe that they will be widely welcomed and acted upon, given the chance. There is no greater form of indoor air pollution than other people's tobacco smoke, and moves to deal with the problem will be met with strong support and relief from the vast majority of people.

Mr. Anthony Steen: I thank my hon. Friend the Member for Hexham (Mr. Amos) for allowing me to say a few words at this unearthly hour in the morning. I would not have dreamt of staying up this late if I did not wholeheartedly support what he has said. He made a cracking speech, and it is a great shame that more people did not hear it.
My hon. Friend said that the polluter must be sharply reminded that smoking is damaging, dangerous and unacceptable to other people. There is also a carrot: those who administer and organise public places such as restaurants, hotels and cafes should realise that, if they provided smoking-free areas, they would attract more non-smokers. Many people like me refrain from going to restaurants and cafes because they cannot stand the inconsiderate smoker who puffs smoke into their faces. As a result, restaurants and cafes suffer.
Surely the market force argument speaks even louder. Those who complain about the increased costs of running a business would have an easy way forward if they banned smoking other than in defined areas. They would find that


their business would increase and prosper. That must be the best way to decrease the number of people who smoke in public places. It is up to the operators to realise that the market force argument would prove the case.
My hon. Friend's robust and determined attempts to reduce the imposition of smokers on non-smokers were preceded many years ago by the efforts of my hon. Friend the Member for Ealing, Acton (Sir G. Young), who took a most unpopular line in trying to stop people smoking. My hon. Friend the Member for Hexham has carried on that magnificent work and I hope that, in future, the House will have an opportunity to say that he and my hon. Friend the Member for Acton were the early fathers who changed the law so that people who find smoking in public places offensive will be able to thank them for their sterling work. I congratulate my hon. Friend the Member for Hexham on the wonderful example that he has given to us tonight.

The Minister for Health (Mrs. Virginia Bottomley): I warmly congratulate my hon. Friend the Member for Hexham (Mr. Amos) on seeking the opportunity to raise a subject of great concern to us all, and certainly to those of us who want to improve the health of the nation. I share my hon. Friend's deep concern about the damage that smoking can do to people's health. It is the greatest cause of preventable disease in the United Kingdom and is responsible for more than 100,000 premature deaths each year. We have made progress in reducing the prevalence of smoking, but we are not complacent. I welcome the opportunity that is provided by the debate to carry forward the issues of concern for us all, and certainly for my hon. Friend the Member for South Hams (Mr. Steen), even at this unearthly hour. My hon. Friend's consistent concern and championship of the cause have, I believe, helped to change public opinion.
There has been a dramatic shift in the way in which smoking is perceived in Britain and in the areas in which smoking is regarded as unacceptable. My hon. Friend the Member for Hex ham identified many of those areas, which include public transport, British Airways, Air UK, London Regional Transport and the workplace as a whole, in which many more firms introduced non-smoking policies during 1990. I know that the Action on Smoking and Health consultancy, which is available to those who are thinking of establishing smoke-free policies at work, has received about 200 requests for its services. I pay tribute to the work that is undertaken by ASH. I am pleased to say that the Government are able to fund it to the tune of about £241,000. It has done much to press the issue and bring it to the public's attention.
In setting out his five-point plan, my hon. Friend the Member for Hexham referred to the steps that are being taken by several Government Departments. It is the intention of those of us within the Department of Health to achieve a smoke-free environment by agreement with the work force. The new buildings that are being planned in Leeds are intended to be smoke-free. During the time that I have been a Minister—over 18 months—many more no-smoking signs have been erected in public places. We shall shortly be producing renewed guidance for smoke-free policies in hospitals. We have commissioned an independent consultant, who has already produced a

draft. We shall be consulting within the service shortly before making the guidance widely available. I hope that many others will follow our example.
My hon. Friend the Member for Hexham will know that the Department of the Environment will soon be producing guidance on smoking in public places, as envisaged by the Environmental Protection Act 1990. I am pleased that my hon. Friend identified the document that we recently helped to fund called "Passive Smoking: A Health Hazard". It was produced by the Cancer Research Campaign and the Imperial Cancer Research fund. That is authoritative information on a subject that is of great concern and importance to us all.
In his five-point plan, my hon. Friend the Member for Hexham referred to the mixed resolution and the request of the EC for information about the implementation of the directive. I assure him that we shall be providing that information as soon as the Commission formally requests it. We are fully confident that the progress that we have made will be equal to, or ahead of, that of other countries that are carrying forward the work.
My hon. Friend's suggestion of Smoking Rooms in this place is one that he should take up with the House authorities. He will understand that the matter is not entirely for me. I certainly wish him well. I shall watch the progress of my hon. Friend's Bill with care to see how it develops. There can be no doubt that the contribution of my hon. Friend, with the forthright remarks of my hon. Friend the Member for South Hams, who speaks so powerfully about the market forces that I believe have substantially but subtly led to changes over many years, have led to developments over the years which no one, whether at work, at business, at play or at home, can afford to underestimate.
Although the figures have come down significantly—we have had one of the greatest falls in the prevalence of smoking among the countries of the EC—we remain concerned about the amount of smoking among women, particularly young women. That is why one of the first steps that I took on becoming a Health Minister was to launch the teenage smoking campaign, and we have recently announced an initiative on the whole question of smoking by pregnant women. The effect of smoking not only on the mother but on the infant is incontrovertible. About one in 12 pregnant women still smokes, despite the evidence of the effect in terms of the low birth weight of the baby. That issue must be of great concern to us all.
Of every 1,000 young people smoking now, six will die on the roads, but 250 will die from the habit. Most will die from lung cancer, respiratory disease or heart disease. Many will die in middle age. So we must make discouraging smoking a high priority.
As my hon. Friend the Minister for Hexham pointed out, our advisory independent scientific committee on smoking and health has made it clear that there is a 10 to 30 per cent. increase in the risk of contracting lung cancer for non-smokers who are habitually exposed to tobacco smoke. That issue must be addressed urgently.
There are economic advantages from having a no smoking policy at places of work and leisure, including lower cleaning and redecorating costs, reduced absenteeism—50 million working days are lost each year from smoking-related diseases—higher morale and a better corporate image.
The tide is clearly flowing in the right direction. The incidence of smoking is being reduced, and smoke-free


provision is increasing. We must work with employers, managers and consumers to deliver a pleasant and healthy environment. Prevention is better than cure. As a Health Minister, I am involved in improving the services available to sick and disabled people. Smoking is unhealthy and unpleasant. It damages people's health, as the new label on cigarette packages makes only too clear.

Mr. Steen: Is my hon. Friend saying that we should introduce legislation, and will she propose that the Government do so?

Mrs. Bottomley: My hon. Friend will know that the voluntary approach has had great success. Our reduction

in the prevalence of smoking has been in the forefront among EC countries. Our action has been effective and powerful and has changed attitudes, understanding and, above all, behaviour. At places of work, in public places and in people's domestic lives generally, the speed with which no smoking policies have been adopted has been powerful and effective. We shall continue to use all the levers at our control—of persuasion and encouragement—enthusiastically to champion the cause that my hon. Friend the Member for Hexham has brought to the attention of the House today.

Question put and agreed to.

Adjourned accordingly at eighteen minutes past Two o'clock.